1. FUNDAMENTAL ECONOMIC CONCEPTS
CHAPTER 1: WHAT IS ECONOMICS???

2. SCARCITY AND THE SCIENCE OF ECONOMICS
TINSTAAFL-”There is no such thing as a free lunch”
THE FUNDAMENTAL ECONOMIC PROBLEM:
SCARCITY
THE 4 FACTORS OF PRODUCTION:
LAND
LABOR
CAPITAL
ENTREPRENEURS
THREE BASIC ECONOMIC QUESTIONS
WHAT SHOULD SOCIETY PRODUCE??
HOW SHOULD IT BE PRODUCED??
FOR WHOM IS IT PRODUCED??

3. MEANING AND SCOPE OF ECONOMICS
MACROECONOMICS, MICROECONOMICS
DEFINITION OF ECONOMICS:
“STUDY OF HOW PEOPLE SATISFY COMPETING WANTS AND NEEDS THROUGH THE CAREFUL USE OF SCARCE RESOURCES”.
THE STUDY OF ECONOMICS IS BASED ON THE SOLVING OF ECONOMIC PROBLEMS:
ECONOMISTS:
1. DESCRIPTION
2. ANALYSIS
3. EXPLANATION
4. PREDICTION
These 4 steps help create Economic Models.

4. ECONOMIC GROWTH PER REGION OF USA 2010

5. 2012 PROPOSED US BUDGET MILITARY SPENDING LAW 20% ENFORCEMENT 8%
INFRA-
STRUCTURE 5%
MISCELLANOUS ??
MILITARY
SPENDING
20%
LAW
ENFORCEMENT 8%
BUSINESS
AND BANKING
REGULATION 8%
SOCIAL
PROGRAMS
22%
EDUCATION
12%
TRANSPORTATION
14%

6. TRADE-OFFS AND OPPORTUNITY COSTS
CHOICES
DECISION-MAKING GRID-- $30,000
Price Use Cost of Upkeep
CAR
TRUCK
OPPORTUNITY COSTS
PRODUCTION POSSIBILITIES CURVE
MILITARY GOODS
CARS, TRUCKS

7. SECTION 3: WANTS AND NEEDS
GOODS, SERVICES
Durable good
Non Durable
CONSUMERS
Conspicuous consumption
PRODUCERS
VALUE
PARADOX OF VALUE
UTILITY
WEALTH

8. ECONOMIC INTERDEPENDENCE
PRODUCTIVITY
PRODUCTION—make a product efficiently.
Efficiency is based on:
SPECIALIZATION OF LABOR
DIVISION OF LABOR
HUMAN CAPITAL– investment, time, labor, $$
ECONOMIC INTERDEPENDENCE
THE WORLD IS TIED TOGETHER ECONOMICALLY.
COUNTRIES DO NOT HAVE THE ABILITY OF EXISTING IN ISOLATION ANYMORE
THE USA DEPENDS ON 60% OF ITS LAND RESOURCES FROM OTHER COUNTRIES.

10. ECONOMIC SYSTEMS AND CIRCULAR FLOW MODELS
TRADITIONAL
EXAMPLES AND DESCRIPTION
STRENGTHS
WEAKNESSES
COMMAND
Dialectic materialism---Thesis—Antithesis--Synthesis
CAPITALISM, MARKET, FREE ENTERPRISE (laissez-faire)
MIXED-MARKET SYSTEM—John Maynard Keynes, FDR.
INVOLVES TAXES, AND GOVERNMENT REGULATION
ECONOMIC AND SOCIAL GOALS OF AMERICAN ECONOMY:
ECONOMIC FREEDOM
ECONOMIC EFFICIENCY
ECONOMIC EQUITY
ECONOMIC SECURITY
FULL EMPLOYMENT
PRICE STABILITY
ECONOMIC GROWTH
TRADE OFFS BETWEEN GOALS:

11. AMERICA’S ECONOMIC SYSTEM MIXED-MARKET
1. COMPETITION AND FREE ENTERPRISE:
ECONOMIC FREEDOM
VOLUNTARY EXCHANGE
PRIVATE PROPERTY
PROFIT MOTIVE
2. THE ROLE OF THE ENTREPRENEUR
3. THE ROLE OF THE CONSUMER
4. THE ROLE OF GOVERNMENT INVOLVEMENT:
PROTECTOR
PROVIDER AND CONSUMER
REGULATOR
PROMOTER OF NATIONAL GOALS
RESULTING IN A MIXED-MARKET ECONOMIC SYSTEM