JA Economics Chapter One What is Economics? Page 2 Economics Social science that studies how people decide to use scarce resources to satisfy their wants Together and as.
Download ReportTranscript JA Economics Chapter One What is Economics? Page 2 Economics Social science that studies how people decide to use scarce resources to satisfy their wants Together and as.
JA Economics Chapter One What is Economics?
Page 2
Economics
Social science that studies how people decide to use scarce resources to satisfy their wants Together and as groups
Page 3
Want vs. Needs
Review the difference What is the want-satisfaction chain?
See page 3 in textbook
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Want-Satisfaction Chain
Production Combines economic sources Results in a good or service
Page 4
Want-Satisfaction Chain
Distribution Process of getting a product or service to consumers
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Want-Satisfaction Chain
Consumption Using a product or service Thought to complete the chain Consumer choses another product or service to want
Want
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Resources Needed Want satisfaction Method of Production Source of availability for Consumption Method of Distribution
Want-Satisfaction Chain
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Factors of Production
Natural resources Land – soil, minerals, timber, and fresh water Human resources Physically Mentally Capital Buildings Tools Machines used for production
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Scarcity
Occurs when wants > available resources Demands that people make choices Choices give way to opportunity cost
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Opportunity Cost
The highest valued alternative given up as a result of making a choice Resources can only be used one time Alternatives that are given up Go to page 5 of the study guide
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Economic way of thinking
Scarcity forces people to chose All choices involve alternatives You give up one thing for another There are benefits and costs to making the right choice.
People try to maximize their benefits while minimizing their costs
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Economic way of thinking
People try to make good choices People respond to incentives(positive) Disincentive is like a fine or punishment.
People gain when they trade voluntarily Nobody has to trade in US All people trade to gain
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Economic way of thinking
Choices are future orientated Cannot change past choices Our Choices are influenced by the Choices of Others Book talks about oil and interest rates All economic study involves choices All choices though do not need money Example would be volunteer work
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Thinking at the Margin
Resources are scarce Must make careful choices Economists analyze marginal benefits and marginal costs Marginal simply means additional (Bottom of page 9)
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Choice-Making by Businesses Face same scarcity problems Must pay for scarce items Looks for the lowest opportunity cost
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The Profit Motive
Goal of most businesses Profit = total sales > total costs Losses limit the life of the company Business people think at the margin Page 8 & 9 of study guide
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Basic Economic Decisions in a Market Economy Free enterprise or capitalism Relies on voluntary trade Markets allow consumers and sellers to make exchanges Both weigh the costs and benefits to make a choice What, how and for whom?
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Micro or Macro
Macro = whole “big picture” Nationally As a group Micro = individual consumers and businesses What will you pay?
How much should an employees salary be?
Should we buy new computers?
HOMEWORK
1-4 10-11