1. Introduction to Economics
Goal 7
Introduction to Economics

2. Economics - A science that deals with the allocation of scarce resources for the purpose of fulfilling society’s needs and wants.
Science
knowledge gained through experience, study, and experimental investigation.
Allocate –
to distribute, use.

3. resources - something that can be turned into or used to create a good or service
scarcity – Too many wants not enough resources
good – touchable objects
service – actions or work done for others
need – a necessity
want – a desire

4. Good or Service?
itunes
Education
E-book
E-Reader
Uber

5. Need or Want?
Water
music
Toilet Paper
Medicine
Jewelry

6. What you give up when you make a choice.
Scarcity
Too many wants not enough resources.
You can’t have everything you want, so you have to make choices.
Opportunity Costs
What you give up when you make a choice.
Trade-offs
You give up one good to choose another good.

7. Examples Identify the scarcity and the opportunity costs in each.
S1: The school board only has enough money to build either a new gym or a library. The board chooses to build the library.
Scarcity =
Opportunity cost=
S2: The General Assembly must decide between allocating financial resources to hurricane relief or to the Smart Start program for children. Assembly men choose to increase funding for hurricane relief.

8. Examples Identify the scarcity and the opportunity costs in each.
You have 1 dollar. For breakfast you can buy a donut for 75 cents
or a bagel for 75 cents. You buy the bagel.
Scarcity =
Opportunity cost=
Your company produces glass vases. Your supplier lost his
warehouse to a fire, and can only supply one type of vase- either a
round vase or rectangular vase. You choose the rectangular vase.

9. Scarcity = Opportunity cost=
S3-You have 1 dollar. For breakfast you can buy a donut for 75 cents
or a bagel for 75 cents. You buy the bagel.
Scarcity =
Opportunity cost=
S4 Your company produces glass vases. Your supplier lost his warehouse to a fire, and can only supply one type of vase- either a
round vase or rectangular vase. You choose the rectangular vase.

10. Identify the scarce resource and the opportunity cost.
S5 You have $60. You want to buy the red sweater and the blue jacket, but each costs $50. You buy the red sweater.
S6 You are the fire chief in a town with a population of 20,000 people. There are only enough fire engines to fight one major fire. Unfortunately, a major fire breaks out at the local grocery store and at the local theatre. You send your fire fighters to the theatre.
S7 You are the manager of a supermarket. Lots of customers are waiting to be checked out at Moe’s register and Tasha’s register. You only have one bagger working, so you send her to Tasha’s register.

11. Three Basic Economic Questions
Every country must answer the three basic economic questions.
How they answer the three basic economic questions tells what type of system the country is. (Later)
Businesses answer the three questions also.

12. Three Basic Economic Questions
For whom to produce?
How to Produce
What to Produce?

13. FACTORS OF PRODUCTION- the resources used to produce a good or service
Natural resources
(example: cotton)
Capital resources
(example: thread)
Entrepreneur
(example: T. W. Stewart, 1893)
Labor
(example: factory worker)
Objects supplied by the earth that are used by people to create a good or a service
Human resources; people who perform jobs to create a good or a service
Man-made goods that are used to produce other goods
The person who takes a risk and combines the other factors of production to create a good or a service.

14. Examples Identify factors of production for a jar of Jiff peanut butter.
__________________________
________________________
_________________________
____________
_________ ________
Natural Resources
Capital Resources
Entrepreneur
Labor

15. Identify a service and list the factors of production.
Service ________________________________________ Labor _________________________________________ Natural resources ____________________________________________ Capital resources ____________________________________________ Entrepreneur ____________________________________________

16. Explain the division of labor found in the following situations:
 Federal government _____________________________________________________________________________________________________________________
 Workers at a grocery store
________________________________________________________________________________________________________________________