2. Scarcity Choices What is given up ECONOMICS Unlimited Needs and Wants Demand Choice s L imited R esources Supply YOU CAN’T HAVE EVERYTHING YOU WANT!!!

3. Food, clothing, shelter, New car, mansion, Nintendo DS, jewelry, iPod, projector, digital camera, good health, children, camcorder, laptop warmth, indoor plumbing, rollerblades, a sense of personal worth, Plasma TV, literacy, high economics grade, cell phone, compact discs, Wii Unlimited Human Wants Limited Resources Land, L abor, C apital, E ntrepreneur R ent, W ages, I nterest, P rofits

4. . Land natural resources Nature’s items“gifts of nature Land [natural resources] – Nature’s items [“gifts of nature”] In the earth A. In the earth - coal, oil, fossil fuels, etc. On the earth B. On the earth – vegetation and water In the atmosphere C. In the atmosphere – sun, wind, and rain The Factors of Production THE SCARCE INGREDIENTS USED TO PRODUCE GOODS AND SERVICES “Gifts of Nature” Water Wind Sun Fossil fuels

5. . Laborhuman resources Labor [human resources] Physical A. Physical – pro athletes & lumberjacks Intellectual B. Intellectual – ministers, doctors & lawyers

6. Nn. Capital (machines and tools) Capital (machines and tools) CAPITAL CAPITAL [tools, machinery, & factories] Can produce something directly with these The word CAPITAL can also be used to describe MONEY used to start a business. But a pile of money is not a tool and can’t produce anything by itself.

7. . Do the Benefits outweigh the cost? Scales of Economics Expected marginal benefits Expected marginal costs Marginal is defined as “additional”

8. Basic Economic Choices What to produce? How to produce? Who receives? Answers Determine The Type of Economic System MarketTraditionalCommand

9. ALTERNATIVE ECONOMIC SYSTEMS Market Model- the three fundamental questions are answered by individuals in their own self-interest. Command Model- the three fundamental questions are answered exclusively by the government. Traditional Model- the three fundamental questions are answered through customs.

10. ALL OF THE WORLD’S SYSTEMS ARE MIXED

11. A B C C onsumer Good [iPhones] opportunity cost  Graphical representation of the opportunity cost of using scarce resources to produce one good [or service] instead of another good [or service]. C onsumer G oods (food, shelter, clothing) Capital Goods 10 4 7 5 6 3 Capital Good [Robots] Demonstration of economic growth

12. Pizzas Industrial Robots Attainable 0 1 2 3 4 5 6 7 8 9 1413121110 9 8 7 6 5 4 3 2 1 Unattainable A B C D E Economic Growth 1.More/better resources 2.Better technology Now Attainable A’ B’ C’ D’ E’ Production Possibilities Curve