1. What is Economics?

2. What is Economics? “Economics is the study of how individuals
Write This Down
What is Economics?
“Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”

3. What does this definition mean?
What is Economics?
“Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”
What does this definition mean?

4. “Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”
Economics studies both the individuals and society
Micro - focuses on individuals or small segments of society

5. “Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”
Economics studies both the individuals and society
Macro - focuses on the economy as a whole or large groups/subdivisions like Gov’ts

6. What is Economics? “Economics is the study of how individuals
Write This Down
What is Economics?
“Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”
Micro – deals with behavior/decisions of
small units like individuals or firms
Macro – deals with economy as a whole & behavior of large units like gov’t & unions

7. What are they exactly? Scarcity = limited, desirable, price, relative
“Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”
Economics studies the choices we make to allocate
scarce resources
(Requirements)
Scarcity = limited, desirable, price, relative
Resources = Factors of Production
What are they exactly?

8. There are four categories of resources
1. Land

9. There are four categories of resources
1. Land
Included in LAND are air, water, & raw materials like timber, copper, etc.
We could increase it by going to other planets, but
Lets assume this world is the only source of land we have.

10. Land is scarce because there is only a limited amount of it available
There are four categories of resources
1. Land
Land is scarce because there is only a limited amount of it available
We could increase it by going to other planets, but
Lets assume this world is the only source of land we have.

11. Because we want everything…. and resources are limited….
There are four categories of resources
1. Land
Because we want everything….
and resources are limited….

12. It is almost as if there is a fight that occurs between our unlimited wants
and the limited resources that are available.
This cost is not always a monetary cost.
COST
It can be a social cost, emotional cost,
Jealousy cost, there are any number of costs
The limited resources.
Our unlimited wants.
Whenever our unlimited wants are going after the limited
Resources available, there is always a cost.
Nothing on Earth is free.

13. The payment for land is in the form of either mortgage or rent
There are four categories of resources
1. Land
The payment for land is in the form of either mortgage or rent

14. What is Economics? “Economics is the study of how individuals
Write This Down
What is Economics?
“Economics is the study of how individuals
and society, experiencing virtually limitless
wants, chooses to allocate its scarce resources
to satisfy those wants.”
Micro – deals with behavior/decisions of
small units like individuals or firms
Macro – deals with economy as a whole & behavior of large units like gov’t & unions

15. The 4 categories of resources (Factors of Production)
Micro – deals with behavior/decisions of
small units like individuals or firms
Macro – deals with economy as a whole & behavior of large units like gov’t & unions
The 4 categories of resources
(Factors of Production)
Payment
1. Land
Mortgage or rent
2. Labor

16. many willing and/or able to do a job
LABOR
Labor is scarce because there only so many people on the planet AND only so
many willing and/or able to do a job

17. Salary, wages, tips, commission, etc.
LABOR
The payment for labor =
Salary, wages, tips, commission, etc.

18. The 4 categories of resources (Factors of Production)
Micro – deals with behavior/decisions of
small units like individuals or firms
Macro – deals with economy as a whole & behavior of large units like gov’t & unions
The 4 categories of resources
(Factors of Production)
Payment
1. Land
Mortgage or rent
2. Labor
Wages, salary, tips, etc.
3. Capital

19. Capital with an A are things used to make products
Not this Capitol, but Capital
Capital with an A are things used to make products
“stuff you use to make other stuff”

20. In economics,
money is NOT
considered to
be capital.
Not this capital either!!

21. Capital goods
PRODUCE
goods for future
consumption
Not this capital either!!

22. Not this capital either!!
Money doesn’t
produce
anything,
it’s just there
Story of Heart of Darkness to illustrate money only has value because we have decided to give it value. It doesn’t have value in and of itself.
Not this capital either!!

23. Capital Factory Equipment Machinery
To be capital, it must be a physical item used in the production process such as:

24. Capital Factory Equipment Machinery
Capital is scarce because there are a limited number of machines, equipment, and factories.

25. The payment for capital is:
Factory
Equipment
Machinery
The payment for capital is:
PRINCIPAL + INTEREST

26. The 4 categories of resources (Factors of Production)
Micro – deals with behavior/decisions of
small units like individuals or firms
Macro – deals with economy as a whole & behavior of large units like gov’t & unions
The 4 categories of resources
(Factors of Production)
Payment
1. Land
Mortgage or rent
2. Labor
Wages, salary, tips, etc.
3. Capital
Principle + Interest
4. Entrepreneurship

27. An individual who is willing to take a risk to start a business.
Entrepreneurship
An individual who is willing to take a risk to start a business.

28. Entrepreneurship
Entrepreneurs are scarce because there is a limited amount of individuals who want to start his or her own business.

29. The payment for the risk of starting a business is in the form of:
Entrepreneurship
The payment for the risk of starting a business is in the form of:
Profit – if you are good

30. The payment for the risk of starting a business is in the form of:
Entrepreneurship
The payment for the risk of starting a business is in the form of:
Loss – if not so good.

31. The 4 categories of resources (Factors of Production)
Micro – deals with behavior/decisions of
small units like individuals or firms
Macro – deals with economy as a whole & behavior of large units like gov’t & unions
The 4 categories of resources
(Factors of Production)
Payment
1. Land
Mortgage or rent
2. Labor
Wages, salary, tips, etc.
3. Capital
Principle + Interest
4. Entrepreneurship
Profits/Losses

32. Capital Entrepreneurship Land Labor Memory Trick 3. Capital
Principle + Interest
4. Entrepreneurship
Profits/Losses
Memory Trick
Capital
Entrepreneurship
Land
Labor
Cells are the building blocks of life, FOP’s are the building block of economics.

33. Time could also be considered a FOP…
Factors of Production
Additional Info
Time could also be considered a FOP…
But most consider it included in the other factors

34. Scarcity = wants > availability resources
What is Economics?
Economists like to explain everything in
equation form
Economics = Scarcity
Scarcity = wants > availability resources
So then the mathematical formula for defining economics is:
Economics = Scarcity = wants > availability resources

35. Economics = Scarcity = wants > resources
4. Entrepreneurship
Profits/Losses
Memory Trick
Capital
Entrepreneurship
Land
Labor
Cells are the building blocks of life, FOP’s are the building block of economics.
So, Economics is…
Economics = Scarcity = wants > resources
unlimited
limited

36. On the back of this paper, copy & color the chart (fig 1
On the back of this paper, copy & color the chart (fig 1.1) from page 6 of the textbook