economics
study of how people satisfy their wants and need
we tend to use money to purchase our ___________
wants and needs
what are needs?
anything a person has to have to survive
Batering
trading one thing for another
what are wants?
things you would like but do not need to survive
scarcity
a limited amount of resources to meet unlimited wants and needs
why do we have scarcity?
we have unlimited wants/needs but limited resources, so we need to make choices > what to produce, how to produce, for whom to produce
causes of scarcity
personal perspective (your own feelings of what is needed or wanted), poor distribution of resources (not using resources to full potential), Rapid increase in demand (sudden rush to use resources can cause a shortage and raise price)
how do businesses make money?
by selling goods and services
what are goods?
physical objects (cars, computers, food)
what are services
actions (concert, teaching)
economic questions
- what goods and services will be produced?
- how will the goods and services be produced?
- who are the goods and services for?
what are resources?
the materials from which goods and services are made.
what are human resources?
a person’s knowledge, skills, attitudes, and abilities determine that Indvidual’s value as a human resource
what are natural resources?
raw materials from which goods and services are made
what are capital resources?
money and property used to produce goods and services (tools, buildings, machines)
ways we deal with scarcity
Doing without something (I’ll go to prom but not senior trip), create resources (I’ll get a second job), make better use of resources (While I watch tv, I’ll grade papers)
real costs
all the resources used to produce a good or service, resources can be used only for one thing at a time
trade offs
when you choose between two possible uses for a resource
opportunity costs
value of time, money, goods, services given up in economic choice, #1 alternative is opportunity cost
economic system
the method used by a society to produce and distribute goods and services OR how the government tells us what we can get and how to get in
tradional economy
economic questions are answered by habits and customs (the way it’s always been done), children work the same jobs parents worked often farming or hunter/gatherer, fear change
command economy
the government answers economic questions, advantages: able to act quickly in emergencies, provide for all people equally. Disadvantages: inefficient, no incentive to work hard or be creative
free market economy (free enterprise/capitalism)
economic questions are answered by individual buyers and sellers, laissez faire, supply and demand, people act out of self interest
