1. What is Economics?

2. What is Economics?
The study of how people seek to satisfy their needs and wants by making choices

3. Relationship between Economics and Scarcity

4. What is “Scarcity?”

5. What is Scarcity?”
Economic situation where there are limited quantities of resources to meet unlimited wants and needs.

6. What is a “Shortage?”

7. What is a “Shortage?”
Economic situation in which a good or service(quantity) supplied is less than the quantity demanded at a given price.

8. What are “needs?”

9. Things NECESSARY for survival
What are ”needs?”
Things NECESSARY for survival

10. What are “wants?”

11. Things we desire but are NOT ESSENTIAL to survival
What are “wants?”
Things we desire but are NOT ESSENTIAL to survival

12. What is the “Paradox of Value?”

13. What is the “Paradox of Value?”
Apparent contradiction between the high value of a nonessential item and the low value of an essential item

14. Paradox of Value

15. Marginal Utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important economic concept because economists use it to determine how much of an item a consumer will buy. Positive marginal utility is when the consumption of an additional item increases the total utility. Negative marginal utility is when the consumption of an additional item decreases the total utility.

16. What is “Opportunity Cost?”

17. What is “Opportunity Cost?”
Cost of the next best alternative use of money, time, or resources when one choice is made rather than the other.

18. What is “Trade offs?”

19. What is “Trade offs?”
Trade offs is defined as the alternative that you must give up when your choice is made over the other.

20. You will hear them a lot this semester!
Factors of Production
Remember these!
You will hear them a lot this semester!
Land
Labor
Capital
Entrepreneurs

21. Land
Natural resources (land, coal, water, forests, etc.)

22. Labor
The effort people devote to a task for which they are paid

23. Capital
Physical: Human made objects used to create other goods and services

24. Entrepreneurs (Risk Takers)
Ambitious leaders who combine land, labor, and capital to create and market new goods and services.
(Shark Tank)

25. Factors of Production

26. Process of Production

27. Production Possibilities Curves
 A curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors.

28. Al's Coffee Shop! 50
Coffee 50
Tea

29. Al's Coffee Shop! Any production in this space is inefficient…you50
Coffee
Any production
in this
space is
inefficient…you
have the supplies
but aren’t making
the coffee or tea 50
Tea

30. Efficiency
Efficiency means using resources in such a way as to maximize the production of goods and services. An economy producing output levels on the production possibilities frontier is operating efficiently.

31. Al's Coffee Shop! Any production along this line is EFFICIENT Coffee50
Any production
along
this line is
EFFICIENT
Coffee 50
Tea

32. Growth
Growth If more resources become available, or if technology improves, an economy can increase its level of output and grow. When this happens, the entire production possibilities curve “shifts to the right.”

33. Al's Coffee Shop! Al gets a loan from The bank and now50
Al gets a loan from
The bank and now
He can make even
More coffee or tea!
Coffee 50
Tea