1. Today’s DOA Be prepared to answer the following questions: 1. Why is economics considered to be a social science? 2. Why do economic decisions fall on us? 3. Why is it important for us to understand the process of economics?

2. Introduction to Economics Consumers

3. What is Economics? REMEMBER… Economics is the study of how people try satisfy their own needs/wants through the careful use of scarce resources.

4. Scarcity of Resources REMEMBER… Condition that results from not having enough resources to produce all the things you would like to have.

5. Factors of Production REMEMBER… Resources required to produce things we would like to have. Production refers to the process of creating goods/services. There are 4 factors of production: 1. Land 2. Capital 3. Labor 4. Entrepreneurs

6. Economics as a Social Science REMEMBER… Economics studies the behavior of people as they deal with basic issues. There are four key elements to the study of Economics: 1. Description 2. Analysis 3. Explanation 4. Prediction

7. Consumers Person or individuals who use goods/services to satisfy their wants/needs. How are you a consumer?

8. Consumers Today’s lesson will focus on the following: 1. What is a good? 2. What are services? 3. What is wealth? 4. What is value? 5. What is utility?

9. What is a Good? Goods have the following characteristics: 1. Useful items 2. Tangible 3. Consumer goods – those used by individuals 4. Capital goods – used to make consumer goods Example – oven for a bakery

10. What are Services? Services have the following characteristics: 1. Work performed by someone 2. Intangible Examples – doctor, teacher, lawyer, welder, hairstylist

11. What is Wealth? Our society may define wealth by the accumulation of money/items that an individual has. However, economic wealth is the accumulation of products that are: Tangible Scarce Useful Transferable (movable)

12. What is Value? Value can be described by the following: 1. The worth of something 2. Expressed in currency 3. Necessity vs. Scarcity

13. The Paradox of Value Adam Smith is considered to be the “father of Economics”. This contradiction is called Paradox of Value. He observed that some necessities (water) had a low value while some nonecessities (diamonds) had a high value.

14. The Paradox of Value Economists know that scarcity is necessary for something to have value. Although, scarcity by itself does not fully explain how value is determined.

15. What is Utility? Utility can be described by the following: 1. The capacity to be useful 2. Provides satisfaction For something to have value it must have both scarcity and utility. What is valuable to you?

16. Exit Slip 1. What is the difference between a good and a service? 2. Why do you think some goods are more valuable than others? 3. What did Adam Smith mean by the Paradox of Value? 4. How is value determined?