1. What Is Economics? Chapter 1

2. Goals & Objectives 1.Fundamental Economic Problem. 2.3 Basic Economic Questions. 3.Relationship among: Value, Utility, Wealth, Scarcity. 4.Construct of Economic Activity. 5.Trade-offs & Opportunity costs.

3. The Fundamental Economic Problem: Scarcity  Societal Wants vs. Individual Needs  SCARCITY: Free Markets or Socialism  ECONOMICS—people and their wants and needs…The Role of Government

4. Scarcity

5. Scarcity  List scarce resources:  Scarcity+Socialism= WAR! Japan WWI Japan WWI Germany WWI; WWII Germany WWI; WWII Communist Revolutions Communist Revolutions Socialism & Poverty Socialism & Poverty

6. Modern Day Socialism & Elite System of Government

7. TINSTAAFL  “There is no such thing as a free lunch!”  Explain: food, shelter, insurance, clothing, gas, water, cell phones, subsidies, bailouts, etc…  The Role of Government: the redistribution of wealth….Socialism protecting the Elite Class from competition

8. Gov’t Handout vs Free Enterprise

9. TINSTAAFL 1.ENTITLEMENTS: Who Pays? Who Benefits? 1.Welfare, Food Stamps, Medicaid, Obamacare, SSD, SSI, Pre-K, Subsidized: Housing, Cell Phones, College, etc… 2.Subsidies: Who Pays? Who Benefits? 3.Bail-outs: Who Pays? Who Benefits?

10. Welfare vs. Workers

11. 3 Economic Questions all Societies must answer WHAT TO PRODUCE?.. WHAT TO PRODUCE?.. HOW TO PRODUCE?.. HOW TO PRODUCE?.. FOR WHOM TO PRODUCE?.. FOR WHOM TO PRODUCE?..

12. ECONOMIC SYSTEMS Capitalism/Free Markets: Capitalism/Free Markets: What?: Individual What?: Individual How?: Individual How?: Individual For Whom?: Individual For Whom?: Individual Communism/ Socialism Communism/ Socialism What?: Government or Elite Class What?: Government or Elite Class How?: Government or Elite Class How?: Government or Elite Class For Whom?: Government or Elite Class For Whom?: Government or Elite Class

13. Economic Comparison

14. 4 factors of production 1. Land…explain how it causes production 2. Capital….explain how 1.Financial capital: 2.Capital Goods 3. Labor…explain how it causes production 4. Entrepreneurs: Key Component to Producation 1. Societies that possess all factors of production are wealthy 1.Adam Smith: Causes of Wealth

15. Obama & New Order

16. GDP GROSS DOMESTIC PRODUCT: total #/amount of goods and services produced in the U.S. market Economic Products: Goods… Goods… Consumer goods… Consumer goods… Capital goods…. Capital goods…. Services…. Services…. Consumers…. Consumers….

17. Value, Utility, Wealth Diamonds vs. Water? –Which has more Value? –Which has more Utility? –Which has/creates more Wealth? Useful:Wealth: Paradox of Value: Scarcity by itself is not enough to create value

18. Paradox of Value

19. Types of Productivity JIT THEORY (Just in time) Post WWII theory of production. Why? Free Trade agreements and an end to protective tariffs. JIC THEORY(Just in case) Pre WWII theory of production. Why? Article I Section 8 Clause 1: Duties, Imposts (Protective & Revenue Tariffs)

20. JIT vs. JIC Theory

21. Division of Labor Wages and Specialization of labor?Wages and Specialization of labor? –Free Markets reward specialization. –Socialism marginalizes specialization. High in service vs. Low in service ( Doctors and Check-out clerks)High in service vs. Low in service ( Doctors and Check-out clerks) Why would industry convert to specialization of production?Why would industry convert to specialization of production?

22. Specialization & Wages

23. Economic Interdependence Explain: “ the gain in productivity and income as a result of increased specialization almost always offsets the costs associated with the loss in self- sufficiency ”.Explain: “ the gain in productivity and income as a result of increased specialization almost always offsets the costs associated with the loss in self- sufficiency ”. Capital Goods & Efficiency: Consumer CostsCapital Goods & Efficiency: Consumer Costs

24. Adam Smith Father of free markets and “ capitalism ” Father of free markets and “ capitalism ” The Wealth of Nations (1776) The Wealth of Nations (1776) Radical ideas? Radical ideas? The Invisible Hand The Invisible Hand Laissez-faire Laissez-faire Rich (Aristocracy) vs. Competition Rich (Aristocracy) vs. Competition

25. Smith vs. Elite System of Gov’t

26. Elite vs. Freedom to produce Elite Gov’t Class Elite Gov’t Class Monarchy Monarchy Dictatorship Dictatorship Communism Communism Socialism Socialism A Government: A Government: What? What? How? How? For Whom? For Whom? Individual Freedom Individual Freedom Free Enterprise Free Enterprise Capitalism Capitalism Laissez-faire Laissez-faire Competition Competition Innovation Innovation Creativity Creativity Individual Wealth Individual Wealth

27. Economic Choices Trade-Offs : Gov’t Bailouts No Gov’t Bailouts Entitlements No Entitlements Subsidies No Subsidies Opportunity Costs : Time Free Trade/No Taxes vs. High Standard of Living Skilled vs. Unskilled immigrants

28. Free Enterprise System Willing Buyer Willing Supplier Role of Government Standard of Living: Adam Smith’s laissez-faire policies