Lesson 1

 Economics is the study of how things are bought and sold.  When you go to the store and buy milk, you are participating in the local economy.  When your parents buy a new house, they are participating in the national economy.  When you buy something made outside of the U.S.A. (i.e. China), you are participating in the global economy.  To be part of an economy, you must buy and sell goods or services.

 Goods and services are the products that satisfy our needs and wants.  Goods are any items that can be bought or sold.  Examples: Clothing, bicycles, breakfast cereals, and computers.  A service is any action that one person or group does for another in exchange for payment.  Examples: Teachers, cooks, lawyers, bankers, comedians, nurses, and doctors.

 Each region of the U.S. produces goods and services, depending on the available resources.  A resource is anything used to produce goods and services. ▪ Renewable Resource: one that can be replaced, either naturally or by man. ▪ Nonrenewable Resource: one that cannot be replaced in a timely manner or at all by nature or by man

RENEWABLE  Wood  Solar Energy  Cotton NONRENEWABLE  Crude Oil/Petroleum  Coal  Natural Gasses  Methane  Ethane

 For example, Washington is one of the top- ranked states in apple production. Its soil, a natural resource, is suitable for growing apples.  Similarly, West Virginia is a region rich in coal  Production is the process of changing raw materials into economic goods that can be used to satisfy the needs and wants of consumers

 Scarcity means we can never have all we want of every good and service.  Desires and wants for goods and services are unlimited, while the resources needed to produce them are limited.

 Scarcity of resources includes money and time.  Citizens, businesses, and governments make economic decisions based on the most effective use of their scarce resources.  Countries rich in resources are better able to meet the needs and wants of their citizens.

 Think small!!!  Small scale  Microeconomics is the study of economic decisions made by consumers and producers that affect individuals in an economy

 Think big!!!  Large scale  Macroeconomics is the study of economic decisions that affect the economy of a nation.

MicroeconomicsMacroeconomics A grocery store has a buy-one-get-one- free sale. The Federal Reserve lowers interest rates. A cell phone company offers a family rate plan. Congress tackles Social Security Issues. A youth organization seeks to recruit volunteers. The nation’s unemployment reaches a 20-year low. A local library extends its hours.The United States’ trade deficit widens with China. The city passes a $0.03 gas tax.OPEC raises the price per barrel of crude oil.

 Introduction to Economics, Part 1 Introduction to Economics, Part 1