1. What is Economics?
Chapter 1.1

2. What is Economics? (textbook)
The study of people producing and exchanging to get the things they want.
The study of how individuals and societies make choices about ways to use scarce resources to fulfill their wants.

3. What is Economics? (real life)
Economics is a tool
Economics is NOT about money
Economics is benefit/cost analysis
If you can weigh the benefits and costs of alternative choices, you can do economics!

4. What is Scarcity? (textbook)
The inability to satisfy all of everybody’s wants.
Trying to meet unlimited wants with limited resources.

5. What is Scarcity? (real life)
Scarcity is the reason we need economic systems (more to be revealed)
Cookie Monster!
“We always come back for more”
Scarcity leads to trade-offs
Trade-offs lead to opportunity costs

6. Scarce Resources Factors of Production
Resources of land, labor, capital and entrepreneurship used to produce goods and services

7. Factors of Production Land/Natural Resources Labor/Human Capital
Natural resources and surface land and water
Labor/Human Capital
Human effort directed toward production goods and services
Capital
Previously manufactured goods used to make other goods and services
Entrepreneurship
Individuals who take risks to develop new products and start new businesses

8. Scarcity and rationing
Because things are scarce, we must ration
What different kinds of rationing are there?
CD’s
Concert wrist bands
DECA Trophy
Transplant organs

9. Costs vs. Price Price is not the only cost of something
What are some other costs?
Cost is what we give up
Price is merely a rationing tool

10. Important Facts about Costs
Your cost is not my cost
All costs are subjective
“Things” don’t have cost until you “decide” to use them
All costs are in the future
Costs in the past are sunk—get over it!
Only a small portion of costs are monetary