2. What is Economics? Chapter 1

3. The study of how society organizes the production, consumption and distribution of goods and services. What is Economics?

4. Either as a consumer or producer INDIVIDUALS make decisions:  Consumers: those who buy & use Goods/Services Goods/Services  Producers: those who provide Goods/Services Goods/Services Who Makes Economic Decisions?

5. Services: Services: activities or actions provided to consumers. Services: Services: activities or actions provided to consumers. 4 1) capital goods 1) capital goods : equipment used in the production of other goods. 2) consumer goods 2) consumer goods : the finished products. 1) capital goods : equipment used in the production of other goods. 2) consumer goods : the finished products. Goods : physical objects used: Private Private Public Public

6. 5 to survive live in comfort The Study of economics begins with the concept, we can’t have everything. Resource Resource is defined as anything used to produce goods or services; man made, or all natural.

7. Economic decisions involve choices.  Choices involve costs and provides benefits.  what do you have to give up?  what do you gain? Costs- Benefits-

8. Factors of Production Resources used in producing goods & services  i tems provided by nature.  h uman effort exerted in production.  e quipment used to produce goods.  t he persons who assume the risk involved in creating a new product or business. land- labor- capital- entrepreneurs-

9.  Scarcity – Human desires exceeds limited Resources available. (sooner or later a limit will be reached) (sooner or later a limit will be reached)  This forces producers to make decisions of what to make or Allocate (to distribute) and consumers what to buy or use. 8 Water!!

10.  Tradeoffs- the decision to sacrifice one resource for another.Scenario: A broke University High student is a huge Soccer fan who wants a Car. The student has an opportunity to work after school, at Burger King or join the soccer team. The Student decides to joins the Soccer team. A broke University High student is a huge Soccer fan who wants a Car. The student has an opportunity to work after school, at Burger King or join the soccer team. The Student decides to joins the Soccer team. 1.What are the trade-offs? 2.What are the costs & benefits of the their decision? Trade-offs:

11. Since we have to make choices and give some things up to receive our desired wants or needs. Opportunity Cost What we give up Opportunity Cost - is defined as the cost of giving up the next best thing in order to obtain something else ( What we give up). Individuals must weigh the alternative choices: time, money, effort…

12. cost…worth…price : the expense of producing an item. : the value of an item expressed in money. : how much an item is selling for. Which is Which?

13. Production Possibility Curves How does the scarcity of resources impact the production possibilities curve? How does the scarcity of resources impact the production possibilities curve? A - Shoes # 1 B - Guns # 2 C - all possible combinations of A & B D - inefficient use of. resources A B C * D * D  These Graphs are used to analyze cost & trade-offs, to show related value. cost & trade-offs, to show related value. 0 10 20 30 40 50 60 70 80 90 908070605040302010 0

14. Production Possibility Curve A B C CC C D D * “E” Line “E” represents a Possibility of Growth{Frontier}. E  Production can increase with an increase in technology &/or resources

15. 14 “Word Up” Directions: On your paper please set it up like this for each key term. -- The Key term -- A Visual, you will draw -- Your Definition of term -- Real Definitions Oh my God…WHY!! Teacher thanks for the best assignment ever!

16. Key Terms:  economics  resource  a need  a want  Consumer  goods  services  scarcity  allocate  labor  land  capital  entrepreneurship  trade-off  opportunity cost