1. Economics-Our Economic Choices
Chapter 1, Lesson 2

2. The Choices Producers Make
Economy can be broken down into 2 broad groups
Consumers and Producers
Producers- Create a product for consumers to use
From artists selling their work at a trade show to multibillion dollar corporations.
Producers use “Factors of Production”
Resources needed to make the stuff we want
They are land, capital, labor, and entrepreneurs.

3. Land
 In economics, land refers to the “gifts of nature,” or natural resources not created by people. 
Land includes deserts, fertile fields, forests, mineral deposits, livestock, sunshine, and the climate necessary to grow crops.
Land is considered as being fixed, or in limited supply because at any given time there is a limited amount of natural resources available.
Changing world events and market speculation can easily affect the prices of limited natural resources such as oil and metals.

4. Capital
A second factor of production is capital, sometimes called capital goods
—the tools, equipment, machinery, and factories used in the production of goods and services.
Capital is unique because it is the result of production.
A bulldozer, for example, is a capital good used in construction. When it was built in a factory, it was the result of production involving other capital goods.
The computers in your school that are used to produce the service of education also are capital goods.

5. Labor A third factor of production is labor
—people with all their efforts, abilities, and skills.
This category includes all people except a unique group of individuals called entrepreneurs.
Historically, factors such as birthrates, immigration, famine, war, and disease have had a dramatic impact on the quantity and quality of labor.

6. Entrepreneurs A fourth factor of production
Entrepreneurs are risk-takers in search of profits who do something with new with existing resources.
They are responsible for much of the change and progress in our economy.
Entrepreneurs are often thought of as being the driving force in an economy because they are the people who start new businesses or bring new products to market.

7. Production Possibilities
Everything we make requires the 4 factors of production.
Economists use the production possibilities curve, sometimes also called the frontier, to illustrate all possible combinations of output.
It is a diagram that represents various combinations of goods and services an economy can produce when all its resources are in use.

9. Opportunity Cost
Economists think in broader terms than dollars and cents when it comes to cost.
Cost is more than just a price tag.
Opportunity cost, the value of the next best alternative given up.
Simply put, it is the cost of what you must forgo in order to get something.

10. Trade-offs
Making decisions requires trading off one item against another.
A trade-off involves a sacrifice that must be made to get a certain product or experience.

11. Consumer Rights
The right to safety—protection against goods that are dangerous to life and health
The right to be informed—to receive information that can be used for reasoned choices and protection against fraud
The right to choose—the right to be protected in markets where competition may not always exist
The right to be heard—the guarantee that consumer interests will be considered when laws are being written
The right to redress—the ability of consumers to receive adequate payment from producers if they are harmed by their products
These consumer rights were part of a movement called consumerism that began in the 1960s.
The movement was an attempt to educate buyers about purchases they make and to demand better and safer products from producers.

12. Consumer Responsibilities
Consumers are expected to behave ethically when dealing with producers and other merchants. 
For example, an ethical consumer is expected to do his or her homework when searching for a product. 
This includes searching for the store with the lowest price and reading the full information about the product, including the operating instructions and other disclosure requirements, before making a purchase.