Introduction to Economics

What is Economics?  Economics is the study of the choices people make to satisfy their wants and needs.  With the person next to you come up with 3 “wants” and 3 “needs”.  Class discussion: What is the difference between wants and needs?  Economics is the study of the choices people make to satisfy their wants and needs.  With the person next to you come up with 3 “wants” and 3 “needs”.  Class discussion: What is the difference between wants and needs?

Categories of Economics  Microeconomics  Study of choices made by economic actors such as households, companies, and individual markets. A single economic actor is involved.  Macroeconomics  Examines the actions of entire economies. For example, unemployment in the US is a macroeconomic topic.  Microeconomics  Study of choices made by economic actors such as households, companies, and individual markets. A single economic actor is involved.  Macroeconomics  Examines the actions of entire economies. For example, unemployment in the US is a macroeconomic topic.

Economic Decision Makers  Consumers  Make decisions on what to buy  Producers  Make decisions on what to provide and how to provide it.  Goods and Services are the focus of economic decisions.  Goods are tangible objects that can be purchased  Services are actions or activities that are performed for a fee.  Consumers  Make decisions on what to buy  Producers  Make decisions on what to provide and how to provide it.  Goods and Services are the focus of economic decisions.  Goods are tangible objects that can be purchased  Services are actions or activities that are performed for a fee.

Economic Resources  Resource- anything that people use to make or obtain what they need or want  Four Factors of Production  Natural Resources  Human Resources  Capital Resources  Entrepreneurship  Resource- anything that people use to make or obtain what they need or want  Four Factors of Production  Natural Resources  Human Resources  Capital Resources  Entrepreneurship

Natural Resources  Can be found either on or in the earth, or in the earth’s atmosphere  Examples  Farmland, Seafood, Freshwater Fish, Oil, Copper, Gold, Coal (on or in the earth)  Sunlight, Wind, Rain (from atmosphere)  Can be found either on or in the earth, or in the earth’s atmosphere  Examples  Farmland, Seafood, Freshwater Fish, Oil, Copper, Gold, Coal (on or in the earth)  Sunlight, Wind, Rain (from atmosphere)

Human Resources  Human resources are any human effort exerted during production.  Can be either physical or intellectual effort  Also referred to as “labor”  Examples: truck drivers, teachers, waiters, carpenters, etc.  Human resources are any human effort exerted during production.  Can be either physical or intellectual effort  Also referred to as “labor”  Examples: truck drivers, teachers, waiters, carpenters, etc.

Capital Resources  Capital resources are the manufactured materials used to create products. These include capital goods and the money used to purchase them.  Capital goods are the buildings, structures, machinery, and tools used in the production process.  Examples: Factories, Dams, Computers, Hammers, Saws, etc.  Capital resources are the manufactured materials used to create products. These include capital goods and the money used to purchase them.  Capital goods are the buildings, structures, machinery, and tools used in the production process.  Examples: Factories, Dams, Computers, Hammers, Saws, etc.

Capital Good v Consumer Good  Some products can be either a capital good or a consumer good, dependant upon how it is to be used.  If I buy a pickup truck for my own personal use, it is a consumer good.  If I buy a pickup truck to be used in my hauling business, it is a capital good.  Some products can be either a capital good or a consumer good, dependant upon how it is to be used.  If I buy a pickup truck for my own personal use, it is a consumer good.  If I buy a pickup truck to be used in my hauling business, it is a capital good.

Entrepreneurship  Entrepreneurship is the organizational abilities and risk taking involved in starting a new business or introducing a new product.  An entrepreneur is a person who attempts to start a new business or introduce a new product. They risk economic failure for the possibility of financial gain.  Entrepreneurship is the organizational abilities and risk taking involved in starting a new business or introducing a new product.  An entrepreneur is a person who attempts to start a new business or introduce a new product. They risk economic failure for the possibility of financial gain.