Economics: What is it? Economics is about producing and consuming goods and services Also about buying these goods and services Making choices If you buy food, that is involved in economics; if you go to the doctor, that is involved in economics as well Economics is a part of almost everything that you do.
Goods and Services Goods- Products; things you can touch and use Services- Things people do for someone else Example: You bought gas at the gas station Gas- a good Gas station attendants serving oil- a service
Examples of goods and servicesGoods Services Goods Computers Services Check-up from doctor Bicycles Waiter serving food Apples Musicians Books Teachers Dolls Clerks Jackets Truck drivers to carry Telephones your mail Socks People who take your Shoes money at the resister Etc. Etc.
Economic ChoicesA basic economic question is, “ How will we use our scarce resources to satisfy our needs and wants?” This is a question that a lot of groups and individuals use everyday.
(Physical)Needs (Physical) needs- things that are necessary for life. These are some basic physical needs for people: Air, water, iPods, food, clothing, TVs, shelter, and heat All of these are necessary. The crossed out ones are not. This is why iPods and TVs are not needs; they are wants. Not permanently satisfied
Psychological Wants Wants are NOT necessary for life. They are things that people want to make them happy. Every person has different wants. Wants are based on where and when people live. Ex) iPads were not people’s wants in the 1910s. Now they are. Ice cream, pair of boots, dolls, etc. Not permanently satisfied
Resources Resources- what people use to make the things to satisfy their needs and wants. These are the three basic types of resources: Natural Resources- things found in nature People- Made Resources- things made by people and used to make more Human Resources- labor
Examples of ResourcesNatural People-Made HumanResources Resources Resources Air Tools • Ideas • Work that people Water Factories do • Energy Plants Machineries • Training Minerals computers Animals
Scarcity Scarcity- when there is a gap between needs and wants on one hand and available resources, goods, services on the other hand. Scarcity exists when needs or wants are greater than available resources, goods, or services.
The four basic economicquestions 1.What…? 2.How…? 3.How many/How much…? 4.Who…?
1. What…? Thistype of question deals with what outputs will be produced or consumed Examples: -What will the farmer grow? -What will the factories make? -What will the tax money be spent for?
2. How…? Thistype of question deals with how outputs are produced and how resources are used. Examples: -How will the factories make a table? -How will the farmer grow apples? -How will they make clothes?
3. How Much/How Many…? Thistype of question deals with how much or how many resources will be used. It also deals with how fast resources will be used up. Examples: -How many trees will be cut? For howlong can we use them? -How many tables will be made?
4. Who…? This type of question deals with the distribution of output. These questions are affected by the costs of goods and services. Examples: -Who will make the desks? -Who will be the gas-stationattendant?
Alternative Cost Alternative Costs- what is given up when a scarce resource is used in a certain way. Example: You wanted to get 2 video games. However, you only had the money to get one. You decide to get the 1st game. The other video game is an alternative cost.
Economic Conflict Economic conflicts are based on values, beliefs, and opinions. The decision depends on who makes the decision. Example: Workers want to get more money for their work but their bosses doesn’t wants to.
Ways to settle EconomicConflictsThese are two ways that an economicconflict can be settled:• Market Bargaining• Government Actions
Economic System Economic Systems- a way of making economic choices and decisions. Three basic types of economic systems: -Traditional Economies -Command Economies -Market Economies
Traditional EconomiesIn a traditional economy, economicdecisions are based on tradition andcustom. Children learn skills from their parents. The same goods and services are produced generation after generation.
Advantages andDisadvantages of a TraditionalEconomyAdvantages: It is very stable. People know what to expect. No one is left out.Disadvantages: Individuals don’t have much choice of what they do. Changes come very slowly.
Command EconomiesCommand Economies- Economies in whicha central authority makes all of thedecisions.Central authority:☀ A king, dictator, powerful politician party, etc.
Advantages of CommandEconomiesAdvantages: Changes in what and how things are produced. It is also produced fairly quickly. The needs of the entire country can be considered by the central authority.
Disadvantages of CommandEconomies Individuals are not encouraged to make new ideas. Individuals do not see why they should work hard. Individuals do not always get their needs and wants. Power is kept by very few people- who often abuses the power for their benefit.
Market EconomiesMarket economies-the result of millions ofbuying and selling decisions made bymillions of individuals. The U.S. economy is basically a market economy.
Advantages of MarketEconomies A lot of people are involved in making economical decisions. Individuals can work on whatever they want to and are encouraged to develop new ideas. Producers can produce whatever they wish. The economy is flexible. Consumers are free to buy the goods and services they choose.
Disadvantages of MarketEconomies Individuals have no way of meeting their needs. There is no guarantee that individuals will succeed in their work. The needs of society as a whole is overlooked; often not the needs of a individual. The economy goes through ups and downs called business cycles.
Bibliography Our Economic SystemBy: Clairece Fegin Mr. Schiff