Fundamental Economic Concepts
Economics <ul><li>The study of meeting peoples unlimited wants and needs with scarce resources.  </li></ul>
Economy <ul><li>How a society chooses to allocate its scarce resources to the unlimited wants of its people (there are man...
Purpose of Economics <ul><li>Goal is to describe, analyze, explain, and  predict  economic activity. </li></ul>
Biggest Economic Problem:  Scarcity <ul><li>ALL RESOURCES ARE SCARCE </li></ul><ul><li>WE HAVE UNLIMITED WANTS </li></ul><...
Factors of Production – The things used to make other things <ul><li>Land  </li></ul><ul><li>(natural resources) </li></ul...
3 Basic Economic Questions <ul><li>What to produce? </li></ul><ul><li>How to produce? </li></ul><ul><li>For whom to produc...
Because of Scarcity Consumers Must Make Choices <ul><li>Trade Off:  Alternative choice </li></ul><ul><li>Opportunity Cost:...
Core Economic Principles <ul><li>Because of Scarcity People Must Choose </li></ul><ul><li>All Choices Involve Costs </li><...
Econ Vocab <ul><li>Productivity </li></ul><ul><ul><li>Measure of the amount of output produced with a set amount of F.O.P....
More Econ Vocab <ul><li>Value </li></ul><ul><ul><li>Something has value if it can be expressed in terms of dollars and cen...
Land Labor Capital Entrepreneur Opportunity Cost Scarcity Value Utility Wealth Productivity Specialization Economic  Inter...
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Fundamental economic concepts

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Transcript of "Fundamental economic concepts"

  1. 1. Fundamental Economic Concepts
  2. 2. Economics <ul><li>The study of meeting peoples unlimited wants and needs with scarce resources. </li></ul>
  3. 3. Economy <ul><li>How a society chooses to allocate its scarce resources to the unlimited wants of its people (there are many kinds of economies). </li></ul><ul><ul><li>How do we do this in the U.S.? </li></ul></ul><ul><ul><li>How is it done in Cuba? </li></ul></ul>
  4. 4. Purpose of Economics <ul><li>Goal is to describe, analyze, explain, and predict economic activity. </li></ul>
  5. 5. Biggest Economic Problem: Scarcity <ul><li>ALL RESOURCES ARE SCARCE </li></ul><ul><li>WE HAVE UNLIMITED WANTS </li></ul><ul><li>There Is No Such Thing As A Free Lunch </li></ul>
  6. 6. Factors of Production – The things used to make other things <ul><li>Land </li></ul><ul><li>(natural resources) </li></ul><ul><li>Labor </li></ul><ul><li>(human resources) </li></ul><ul><li>Capital </li></ul><ul><li>(non natural resources) </li></ul><ul><li>4. Entrepreneurs </li></ul><ul><li>Pencil Factory </li></ul>
  7. 7. 3 Basic Economic Questions <ul><li>What to produce? </li></ul><ul><li>How to produce? </li></ul><ul><li>For whom to produce? </li></ul>
  8. 8. Because of Scarcity Consumers Must Make Choices <ul><li>Trade Off: Alternative choice </li></ul><ul><li>Opportunity Cost: The cost of the next best alternative that was given up. </li></ul>
  9. 9. Core Economic Principles <ul><li>Because of Scarcity People Must Choose </li></ul><ul><li>All Choices Involve Costs </li></ul><ul><li>The Consequences/Rewards of Choices Lie in the Future </li></ul><ul><li>People Respond to Incentives in Predictable Ways </li></ul>
  10. 10. Econ Vocab <ul><li>Productivity </li></ul><ul><ul><li>Measure of the amount of output produced with a set amount of F.O.P. (Factors of Production) </li></ul></ul><ul><li>Specialization </li></ul><ul><ul><li>Focusing on a specific task in order to be more efficient. </li></ul></ul><ul><li>Economic Interdependence </li></ul><ul><ul><li>Because of specialization, each economy depends on other economies. </li></ul></ul>
  11. 11. More Econ Vocab <ul><li>Value </li></ul><ul><ul><li>Something has value if it can be expressed in terms of dollars and cents. </li></ul></ul><ul><li>Wealth </li></ul><ul><ul><li>Something has wealth if it can be passed on to someone else. </li></ul></ul><ul><li>Utility </li></ul><ul><ul><li>The usefulness of something. (Does it have a high or low utility?) </li></ul></ul>
  12. 12. Land Labor Capital Entrepreneur Opportunity Cost Scarcity Value Utility Wealth Productivity Specialization Economic Interdepen- dence Economics Consumer Producer Factor Market Product Market Paradox of Value Trade Off Goods Service Production Possibilities Frontier Circular Flow of Econ. Activity 3 Basic Econ Questions T.I.N.S.T.A.A.F.L.

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