1. Chapter One What is Economics?
JA Economics
Chapter One
What is Economics?

2. Page 2
Economics
Social science that studies how people decide to use scarce resources to satisfy their wants
Together and as groups

3. Want vs. Needs Review the difference
Page 3
Want vs. Needs
Review the difference
What is the want-satisfaction chain?
See page 3 in textbook

4. Want-Satisfaction Chain
Page 4
Want-Satisfaction Chain
Production
Combines economic sources
Results in a good or service

5. Want-Satisfaction Chain
Page 4
Want-Satisfaction Chain
Distribution
Process of getting a product or service to consumers

6. Want-Satisfaction Chain
Page 4
Want-Satisfaction Chain
Consumption
Using a product or service
Thought to complete the chain
Consumer choses another product or service to want

7. Want-Satisfaction Chain
Page 4
Resources Needed
Method of Production
Method of Distribution
Source of availability for Consumption
Want-satisfaction
Want
Want-Satisfaction Chain

8. Factors of Production Natural resources Human resources Capital
Page 5
Factors of Production
Natural resources
Land – soil, minerals, timber, and fresh water
Human resources
Physically
Mentally
Capital
Buildings
Tools
Machines used for production

9. Scarcity Occurs when wants > available resources
Page 5
Scarcity
Occurs when wants > available resources
Demands that people make choices
Choices give way to opportunity cost

10. Page 6
Opportunity Cost
The highest valued alternative given up as a result of making a choice
Resources can only be used one time
Alternatives that are given up
Go to page 5 of the study guide

11. Economic way of thinking
Page 7
Economic way of thinking
Scarcity forces people to chose
All choices involve alternatives
You give up one thing for another
There are benefits and costs to making the right choice.
People try to maximize their benefits while minimizing their costs

12. Economic way of thinking
Page 7
Economic way of thinking
People try to make good choices
People respond to incentives(positive)
Disincentive is like a fine or punishment.
People gain when they trade voluntarily
Nobody has to trade in US
All people trade to gain

13. Economic way of thinking
Page 8
Economic way of thinking
Choices are future orientated
Cannot change past choices
Our Choices are influenced by the Choices of Others
Book talks about oil and interest rates
All economic study involves choices
All choices though do not need money
Example would be volunteer work

14. Thinking at the Margin Resources are scarce Must make careful choices
Page 9
Thinking at the Margin
Resources are scarce
Must make careful choices
Economists analyze marginal benefits and marginal costs
Marginal simply means additional
(Bottom of page 9)

15. Choice-Making by Businesses
Page 11
Choice-Making by Businesses
Face same scarcity problems
Must pay for scarce items
Looks for the lowest opportunity cost

16. The Profit Motive Goal of most businesses
Page 11
The Profit Motive
Goal of most businesses
Profit = total sales > total costs
Losses limit the life of the company
Business people think at the margin
Page 8 & 9 of study guide

17. Basic Economic Decisions in a Market Economy
Page 11
Basic Economic Decisions in a Market Economy
Free enterprise or capitalism
Relies on voluntary trade
Markets allow consumers and sellers to make exchanges
Both weigh the costs and benefits to make a choice
What, how and for whom?

18. Micro or Macro Macro = whole
Page 13
Micro or Macro
Macro = whole
“big picture”
Nationally
As a group
Micro = individual consumers and businesses
What will you pay?
How much should an employees salary be?
Should we buy new computers?

19. HOMEWORK
1-4
10-11