1. Economics and Scarcity

2. Is Economics Important?
Most people in the United States think that it is.
96% of Americans believe economics should be taught in high school (at least basic economics)
Half of the adults who believe this cannot pass an elementary quiz on basic economics
Two out of three high school students cannot pass this same quiz.

3. Scarcity
We have unlimited wants with limited resources.
Must make choices
What to produce? How to produce? For Whom to Produce?
Economics is the study of how people try to satisfy the unlimited and competing wants of people with scarce resources

4. Need v. Want
What is this?
Free stuff
There is no such thing as a free lunch!
Governments must decide what to produce because TINSTAAFL.
-military?
-low income housing?
-Social Security
How to produce?
-More workers and fewer machines?
-Where will they produce?
For whom to produce?
-Based on demand and maximum profits

5. How does our Federal Government Spend Money?

6. How does our Federal Government Spend Money?
Healthcare 27.49%
National Defense 23.91%
Job and Family Security 18.17%
Net Interest 9.07%
Veteran Benefits 5.93%
Education and Job Training 3.59%
Immigration, Law Enforcement, and Administration of Justice 2%
International Affairs 1.85%
Natural Resources, Energy, and Environment 1.64%
Science, Space, and Technology Programs 1.13%
Agriculture 0.97%
Community, Area, and Regional Development 0.43%
Response to Natural Disasters 0.39%
Additional Government Programs 3.42%

7. Factors of Production
Factors of Production – resources required to produce the things we would like to have are land, capital, labor, and entrepreneurs
Land – space and natural resources
-Explains disparities between countries
Capital – Tools, equipment, machinery, and factories used in producing goods and services (also called capital goods)
Financial Capital – the money used to buy the tools and equipment for production
Labor – people, their abilities and skills
Entrepreneurs – Innovators that change the economy
Production – the bringing together of capital, labor, land, and entrepreneurs to get a good or service

8. GDP
GDP – Gross Domestic Product – The monetary value of all good and services produced within a country’s borders in a year.
-This serves as a measure of a country’s wealth and state of the economy
Economics also deals with who gets what, how much people get, unemployment, inflation, international trade, interaction of business and labor, and effects of government spending and taxes
Economists must make predictions. How does this happen in our markets? Government?