1. What is Economics
Chapter 1

2. Section 1: An Economic Way of Thinking
Economics impacts our daily life, and the choices we make.
What Is Economics? It is the study of the choices that people make to satisfy their wants and needs?
From the clothes we buy to the shoes we wear they are all economic choices.

3. Section 1: An Economic Way of Thinking
There are two categories of economics:
1. Microeconomics: Choices made by households, companies, and individuals.
2. Macroeconomics: Focused on the entire economies such as a country (U.S. or globally)
Both are important in understanding why goods and services cost a certain price.

4. Section 1: An Economic Way of Thinking
Two important factors that shape economies are consumers and producers.
Consumers- Are the people who buy things.
Producers are the people who make things to satisfy the wants and needs of consumers.
If consumers aren’t willing to buy this can hurt producers and in turn hurt the economy.

5. Section 1: An Economic Way of Thinking
We often buy things based on what we want or need.
This often determine what goods (products) or services (actions provided for a fee)
We need shelter, food, and clothing. We want televisions, jewelry, or computers.

6. Section 1: An Economic Way of Thinking
Important in helping us make economic decision are the factors of production.
Natural Resources (raw materials), human resources (labor, or intellectual)
capital resources (money or tools), and entrepreneurship (business know how)

7. Section 2: Scarcity and Choice
When we look at the choices we make. We often lack the resources to make all the things we want and need.
From cars, houses, cd’s dvd’s we have limited funds and cannot purchase everything we want.
Scarcity is the economic condition that results from the combination of limited resources and unlimited wants.

8. Section 2: Scarcity and Choice
We often have to Allocate or distribute scarce resources in order to satisfy the greatest number of needs and wants.
We have to answer the three questions of what to produce, how to produce, and for whom to produce.
These Questions are not always easily answered because there are many factors.

9. Section 2: Scarcity and Choice
Identifying Economic Questions
What to Produce- We have to determine what most important wants and needs of our society.
How to Produce- We determine how to allocate resources For Whom to Produce- Determine who we’re providing goods and service for.
All of these question help guide societies and the choices they make are the right ones.

10. Section 2: Scarcity and Choice
Productivity is the level of output that results from a given level of input.
How efficient we are at producing goods can determine if we’re being productive or not. If employees are not making enough of a product it may cause the company to lose money.
To become more efficient it may be wise to do a division of labor or assign small number of task to each employee.

11. Section 2: Scarcity and Choice
Division of labor can be enhanced when a company becomes specialized in one activity or becomes an expert at making a certain product.
This specialization will make a profit if more customers come to you because you’re the best at what you do.
This may allow a company to charge more if the customers are willing to pay for their expertise.

12. Section 3: Opportunity Cost
Production is all about the choices we make in our society. Often we have to make alternative choices when resources are limited.
Often there is a trade-off when we sacrifice one good for another.
The cost of the trade off is the value of the next best alternative that sacrifice for preferred product or item is known as Opportunity Cost.

13. Section 3: Opportunity Cost
When the choices we make are scarce we have to determine how to best use our resources.
Reason sacrifice is an important element of economic choice.
forces people to make trade-offs
results in opportunity costs

14. Section 3: Opportunity Cost
There many choices that can be made among trade offs.
However there is one of the next best alternative choices that can be considered the opportunity cost.
Example would be if you wanted to go to the mall, go on vacation, or visit your friend.
You decide to you really want to see your friend. You really really like the mall, and you don’t have the money to go on vacation. The Mall would be your opportunity cost.

15. Section 3: Opportunity Cost
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.

16. Section 3: Opportunity Cost
Reasons future production possibilities might differ from current production possibilities.
changes in technology
changes in the factors of production

17. Section 4: Exchange Barter is the exchange of one good for another.
Relies on bargaining
results in complicated transactions

18. Section 4: Exchange Self-sufficiency
requires a large supply of tools, equipment, and raw materials
demands extensive skills and knowledge in a variety of fields

19. 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