1. Economics
Chapter 1
Section 1

2. Basic Problem in Econ Wants, needs, goods, services
Economics-study of how individuals, families, businesses & societies use limited resources to fulfill their unlimited wants.
Econ is divided into 2 parts

3. Cont……
Part 1: Microeconomics- Behavior & decision making by small units such as individuals or firms.
Part 2: Macroeconomics- Economy as a whole & decision making by large units such as Governments.

4. Problem of Scarcity The basic problem of econ is scarcity.
Scarcity means that people do not & can not have enough income& time to satisfy their want.
It does not matter how rich you are, you do not have unlimited time. (See figure 1.1)
Shortages are after hurricanes; scarcity is competing alternative uses of resources.

5. Factors of Production
F of P- resources needed to produce goods & services.
Productive resources: land labor, capital, entrepreneurship. (figure 1.2)
LAND: natural resources that exist w/o human intervention. (gifts of nature: animals, trees)

6. Cont…………
LABOR: Work people do(human resources) to produce goods & services. Goods- tangible items that people buy. Services- activities done for others for a fee.
CAPITAL: previously manufactured goods used to make other goods & services. (machines, buildings, & tools used to make cars.)

7. Still Cont………..
Capital also increases productivity. Productivity is greater quantities of goods & services are produced in better and faster ways.
ENTREPRENEURSHIP: People who take risks by creating new products or starting new businesses.
TECHNOLOGY: Use of science to develop new products & new methods of producing & distributing goods & services.

8. Still, Still Cont…….. Effects on Income & Wealth
Distribution of factors of production affects a nation’s income distribution. % of Americans are rich & poor. Nations w/many resources will be wealthier.

9. Next Time Chapter 1 Section 2
The End
Next Time
Chapter 1
Section 2