1. Unit 1, Lesson 2 What Do Economists Study?
AOF Business Economics
Unit 1, Lesson 2 What Do Economists Study?
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2. Economists study how decisions about resources are made
Economists study how people, businesses, and societies make decisions seeking to get the most out of their limited resources.
They study the production, distribution and consumption of goods and service.
Can you name a resource that is not limited? 2

3. Resources are anything that helps achieve needs and wants
Types of Resources:
Natural
Technology
Money
Time
Resources are anything that households and firms need in order to achieve their needs and wants.
What resources do you use regularly? 3

4. Needs and wants always exceed available resources
Households and firms need to make choices because our needs and wants exceed the limited resources available.
Scarcity is the fundamental economic problem that forces consumers and producers to use resources wisely. 4

5. Needs are for survival; wants are nice to have
A need is a basic requirement for survival, such as:
Food
Clothing
Shelter
A want is simply something we would like to have but is not necessary for survival.
Which of these are needs? Which are wants? 5

6. Consumers and producers are economic decision makers
There are two main groups of economic decision makers: consumers and producers.
Consumers choose what to buy.
Producers choose what to provide and how to provide it.
This network of decisions is the basis of all economic systems.
You probably know you’re a consumer. Can you think of ways in which you’re a producer, too? 6

7. Needs and wants determine goods and services
Economists study how needs and wants determine the goods and services that are purchased.
Goods are physical objects that can be purchased.
Services are actions or activities that are performed for a fee.
Product refers to both. 7

8. Economics studies efficiencies
Economics is the study of how individuals, firms, and institutions convert limited resources into goods and services to satisfy our wants and needs. 8

9. Economists also study fiscal and monetary policies
Economists also study how governments regulate and participate in the economy through the laws they set, the purchases they make, and the actions they take.
Economic polices are government decisions that are specifically intended to influence how the economy is functioning. They include decisions that have an effect on mainly on the long term. In the short term, government sets economic policy in two ways:
Fiscal policies
Monetary polices
Can you think of any fiscal policies that are “in the news”? 9

10. Macroeconomics
Seeks to determine the aggregate (total) effect of interaction between all buyers and sellers in a market by measuring:
Gross domestic product (GDP): the total amount of goods and services a country produces in a year.
Rate of inflation: how much prices go up in a given amount of time.
Unemployment rate.
Fiscal policy: where and how much money the government spends in the economy and takes in through taxes.
Monetary policy: how much money is in circulation in the economy

11. Microeconomics
Seeks to determine how individuals and businesses make decisions and the consequences of there decisions by measuring:
The impact of supply and demand on a business.
The costs and benefits of individual and business consumption and production and pricing decisions.
The effects of competition.