1. Unit I: Understanding Basic Economic Problems Confronting All Societies

2. Scarcity, Choice and Opportunity cost  Scarcity-is the fundamental economic problem of having seemingly unlimited human needs and wants, in a world of limited resources.  Choice- is the decision to satisfaction or unsatisfiation.  Opportunity cost- is the cost of any activity measured in terms of the best alternative forgone. It is the sacrifice related to the second best choice available to someone who has picked among several mututally exclusive choices.  Scarcity-is the fundamental economic problem of having seemingly unlimited human needs and wants, in a world of limited resources.  Choice- is the decision to satisfaction or unsatisfiation.  Opportunity cost- is the cost of any activity measured in terms of the best alternative forgone. It is the sacrifice related to the second best choice available to someone who has picked among several mututally exclusive choices.

3. Free good v. economic (scarce) good  A free good is when your choice of one item does not mean that you have to give up another item, while a scarce good is exactly the opposite. -Space  A scarce good is one for which the choice of one alternative requires that another be given up. -Land  A free good is when your choice of one item does not mean that you have to give up another item, while a scarce good is exactly the opposite. -Space  A scarce good is one for which the choice of one alternative requires that another be given up. -Land

4. Microeconomics v. Macroeconomics  microeconomics only affects one particular market -gas prices went up (gas market only)  macroeconomics affects the total level of economic activity. -Prices on everything went up  microeconomics only affects one particular market -gas prices went up (gas market only)  macroeconomics affects the total level of economic activity. -Prices on everything went up

5. Normative v. positive statements  A normative statement is a statement that is based on a judgment, - “ that dog is so ugly ”  A positive statement is a statement based on fact -a foot equals 12 inches.  A normative statement is a statement that is based on a judgment, - “ that dog is so ugly ”  A positive statement is a statement based on fact -a foot equals 12 inches.

6. Monetary incentives, non-monetary incentives, positive incentives and negative incentives.  monetary incentives is to reward associates for excellent job performance through money -money for every A on report card  non-monetary incentives is to reward associates for excellent job through different types of oppurtunities -Candy for answering question  Positive incentive: getting a character voucher for doing something good.  Negative incentives: getting a detention for not following the rules.  monetary incentives is to reward associates for excellent job performance through money -money for every A on report card  non-monetary incentives is to reward associates for excellent job through different types of oppurtunities -Candy for answering question  Positive incentive: getting a character voucher for doing something good.  Negative incentives: getting a detention for not following the rules.

7. Economic reasoning  a. People choose.  b. People ’ s choices involve costs.  c. People respond to incentives in predictable ways.  d. People create economic systems that influence individual decisions.  e. People gain when they trade voluntarily.  f. People ’ s choices have consequences that lie in the future.  a. People choose.  b. People ’ s choices involve costs.  c. People respond to incentives in predictable ways.  d. People create economic systems that influence individual decisions.  e. People gain when they trade voluntarily.  f. People ’ s choices have consequences that lie in the future.

8. Factors of product.  Labor -human capital: the skills a worker has as a result of education, training, or experience that can be used in production.  Capital 1. The resource must have been produced. 2. The resource can be used to produce other goods and services.  Natural resources 1. Must be found in nature 2. They can be used for the production of goods and services  Technology and entrepreneur -Technology: is the knowledge that can be applied to the production of goods and services -Entrepreneur: a person who seeks to earn profits by finding ways to organize different factors of production.  Labor -human capital: the skills a worker has as a result of education, training, or experience that can be used in production.  Capital 1. The resource must have been produced. 2. The resource can be used to produce other goods and services.  Natural resources 1. Must be found in nature 2. They can be used for the production of goods and services  Technology and entrepreneur -Technology: is the knowledge that can be applied to the production of goods and services -Entrepreneur: a person who seeks to earn profits by finding ways to organize different factors of production.

9. Production Possibilities Curve  A production possibilities curve is a graphical representation of the alternative combinations of goods and services an economy can produce.  Efficient: on the line of the curve  Inefficient: under or over the curve  If the point is inside the curve then that means that not all the workers have jobs and not all the buildings are in use it creates idle factors.  A production possibilities curve is a graphical representation of the alternative combinations of goods and services an economy can produce.  Efficient: on the line of the curve  Inefficient: under or over the curve  If the point is inside the curve then that means that not all the workers have jobs and not all the buildings are in use it creates idle factors.

11. Economic Growth  Economic growth is the process through which an economy achieves an outward shift in its production possibilities curve.  When factors of production change the curve is shifted.  Anything that increases the factors of production contributes to the economic growth.  Economic growth is the process through which an economy achieves an outward shift in its production possibilities curve.  When factors of production change the curve is shifted.  Anything that increases the factors of production contributes to the economic growth.

12. Trivia  http://www.superteachertool s.com/jeopardy/usergames/ May201120/game13055986 09.php

13. Citations  Henderson, D. (n.d.). Opportunity Cost: The Concise Encyclopedia of Economics | Library of Economics and Liberty. Library of Economics and Liberty. Retrieved May 9, 2011,  AmosWEB is Economics: Encyclonomic WEB*pedia. (n.d.). AmosWEB: Economics with a touch of Whimsy!. Retrieved May 15, 2011  Tregarthen, T. D., & Rittenberg, L. (2000). Economics (2nd ed.). New York: Worth Publishers.  Henderson, D. (n.d.). Opportunity Cost: The Concise Encyclopedia of Economics | Library of Economics and Liberty. Library of Economics and Liberty. Retrieved May 9, 2011,  AmosWEB is Economics: Encyclonomic WEB*pedia. (n.d.). AmosWEB: Economics with a touch of Whimsy!. Retrieved May 15, 2011  Tregarthen, T. D., & Rittenberg, L. (2000). Economics (2nd ed.). New York: Worth Publishers.