1. What Is Economics? CHAPTER 1 SECTION 1: An Economic Way of Thinking
Holt Economics
12/5/2018
CHAPTER 1
What Is Economics?
SECTION 1: An Economic Way of Thinking
SECTION 2: Scarcity and Choice
SECTION 3: Opportunity Costs
SECTION 4: Exchange
Chapter 1

2. Objectives: SECTION 1 An Economic Way of Thinking What is economics?
What are the factors of production?
What is the goal of entrepreneurship?

3. Economics SECTION 1 An Economic Way of Thinking
Economics is the study of the choices that people make to satisfy their wants and needs.

4. Factors of Production:
SECTION 1
An Economic Way of Thinking
Factors of Production:
natural resources
human resources
capital resources
entrepreneurship

5. The goal of entrepreneurship
SECTION 1
An Economic Way of Thinking
The goal of entrepreneurship
The goal of entrepreneurship is to create a good or service of value by developing a new combination of the other factors of production.

6. Objectives: Scarcity and Choice SECTION 2
Why is scarcity a basic problem of economics?
What issues must producers address to distribute resources?
Why do producers study productivity?

7. SECTION 2
Scarcity and Choice
Scarcity forces people to decide how to use resources effectively. This is why scarcity is the most basic problem in economics.

8. Questions producers must address to distribute resources:
SECTION 2
Scarcity and Choice
Questions producers must address to distribute resources:
what to produce
how to produce
for whom to produce

9. SECTION 2
Scarcity and Choice
Producers study productivity to determine if resources are being used wisely.

10. Objectives: Opportunity Costs SECTION 3
Why is sacrifice an important element of economic choice?
What assumptions are involved in creating a production possibilities curve?
Why might future production possibilities differ from current production possibilities?

11. Reasons sacrifice is an important element of economic choice:
SECTION 3
Opportunity Costs
Reasons sacrifice is an important element of economic choice:
forces people to make trade-offs
results in opportunity costs

12. Assumptions involved in creating a production possibilities curve:
SECTION 3
Opportunity Costs
Assumptions involved in creating a production possibilities curve:
that the amount of available resources and technology will not change during the time being studied
that all the resources being used are utilized as efficiently as possible

13. SECTION 3
Opportunity Costs
Reasons future production possibilities might differ from current production possibilities:
changes in technology
changes in the factors of production

14. Objectives: Exchange SECTION 4
What are the difficulties associated with barter?
Why is true self-sufficiency rare?
What are the economic benefits of interdependence?

15. Difficulties associated with bartering:
SECTION 4
Exchange
Difficulties associated with bartering:
relies on bargaining
results in complicated transactions

16. Why true self-sufficiency is rare:
SECTION 4
Exchange
Why true self-sufficiency is rare:
requires a large supply of tools, equipment, and raw materials
demands extensive skills and knowledge in a variety of fields

17. The economic benefits of interdependence:
SECTION 4
Exchange
The economic benefits of interdependence:
does not require countries to produce all goods they consume
allows countries to specialize in the production of certain goods while trading others

18. CHAPTER 1
Wrap-Up
1. What is the difference between microeconomics and macroeconomics?
2. Why is scarcity important in economics?
3. What three production issues must an economic system address?
4. How can division of labor and specialization increase productivity?
5. Identify the assumptions on which the production possibilities curve is based.
6. Describe the benefits of interdependence.