Introduction to Economics  Economics  The study of how people seek to satisfy their needs and wants by making choices. Need - Something like air, food, or shelter that is necessary for survival Want – An item that we desire but that is not essential to survival

Scarcity Using limited quantities of resources to meet unlimited needs and wants. NEEDS & WANTS FOP’s Goods & Services

An Economic System…  Organizes its resources to distribute goods and services to its citizens  What are the economic resources?

Factors of Production CC EE LL LL apital ntrepreneurship and abor

 Capital  Investment in goods that can produce other goods in the future Human Capital  Education and training, whether formal or on-the-job Physical Capital  Machines, roads, factories, schools, and office buildings

Entrepreneurship  Creative, risk-taking use of the factors of productions in order to… MAKE A PROFIT Dave Thomas Henry Ford G.W. Carver Sam Walton

 Land  Naturally-occurring goods Ex:  Water, air, soil, minerals

 Labor  Human effort used in production

Factors of Production category = land, labor, capital good,entrepreneur, consumer good  Resource  Pine tree  Teacher  Telephone  Chain saw  Lawn mower  Receptionist  Natural gas  Drayton McClane  Crude oil  farmer  Category  Land  Labor  Capital & Consumer  Labor  Land  Labor and Entrepreneur  Land  Labor and Entrepreneur

Trade off vs. Opportunity cost  Trade off  An alternative we sacrifice when we make a decision  Opportunity Cost  The value that is given up when making that decision

Identify the trade-off and opportunity cost in the following.  A nation can make either pizzas or robots. They pick pizzas. Trade-off?  Robots  Opportunity Cost?  The value of the robots  Going to school versus a full-time job. Trade-off?  Job. Opportunity cost?  The salary you aren’t going to receive

 Car companies retool to make more hybrids than SUVs.  Trade-off? The SUVs. Opportunity Cost?  Loss of sales from the SUVs  Going to the movies or going to see grandma. You pick the movies.  Trade-off?  Granny. Opportunity Cost?  The value of the time spent with grandma.

 To cheat on a test or to be honest. Pick—cheat. Trade-off?  Honesty,integrity, reputation  Opportunity cost?  The value you attach to those things