2. Economics is the study of how people seek to satisfy their needs and wants by making choices. This study includes: Individuals Businesses Governments

3. How can we make the best economic choices? SCARCITY & CHOICE –L–L–L–LIMITED amounts of goods and services are available to meet UNLIMITED wants…. This is “scarcity” –S–S–S–Scarcity forces us to make choices, we have to decide which options are most important (you can’t always get what you want!) –A–A–A–A NEED is something essential for your survival Food, shelter, clothing –A–A–A–A WANT is something that is desired but not necessary for surivial New car, designer clothes….. Cell phone???

4. What choices do you make due to the principle of Scarcity??? Scarcity forces everyone to make CHOICES (money, time, or other resources) Personal Choices –S–S–S–Study for test or hang out with friends? –V–V–V–Volunteer work or go the movies? Business Choices –H–H–H–Hang on to cash or risk money to expand business? Government Choices –R–R–R–Reform spending or borrow more money –B–B–B–Big government vs Smaller government Each Choice has a consequence

5. Scarcity vs Shortage Scarcity & Shortage are 2 different concepts: Scarcity always exists! –t–t–t–there are never enough goods & services to supply all wants & needs Shortage occurs when consumers want more of a good or service than producers can make available at a particular price –S–S–S–Shortages may be temporary or long term Think of an example of shortage that we have all recently dealt with –O–O–O–Oil/Gasoline

6. Economic Resources Economic Resources – the means through which goods and services are produced Goods – products you can see and touch Services – activities that are consumed as Factors of production – to create good and services, entrepreneurs may use three factors of production Land Labor Capital

7. Entrepreneurs Entrepreneurs are people who risk capital (money) to create new goods and services for profit They fuel economic growth with original ideas in business, and development of new industries and products The first take for an EP is to assemble the FACTORS OF PRODUCTION What steps can be taken in our sluggish economy to invigorate the entrepreneurial sprit and create new jobs????

8. Entrepreneurs & Factors of Production Land –E–E–E–Economists use the term land to refer to all natural resources used to produce goods and services (fertile land, oil, iron, coal, water, forests…..) Labor –E–E–E–Effort people devote to PAID tasks (Dr., Teacher, Construction Worker…..) Capital –A–A–A–Any human made resource that is used to produce other goods and services –F–F–F–For example: in a computer manufacturing company The buildings that house company & the tools that it used to produce computers are PHYSICAL CAPITAL The educated computer technicians that design products and software are HUMAN CAPITAL

9. Summary: What is Economics? How do we make the best economic choices? SCARCITY (limited resources) forces everyone to make choices between WANTS & NEEDS Individuals, business, governments all make decisions based upon the principle of scarcity Economics is the study of how people seek to satisfy their wants and needs by making choices