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  • Economic products include goods and services since both are produced
  • Valuable antique, coin, baseball card because the item is extremely scarce but being scarce doesn’t necessarily mean it has high value = water (diamond - water paradox essentials are less valued compared to other items), b/c of scarcity of diamonds1. Must be scarce & have utility2. Diamonds are scarce & have utility therefore they have high monetary value while water has utility but is not scarce enough in most areas to warrant high valueWhy It Matters TodayIs LeBron James "worth" $20 million a year?  Many people's gut reaction will be to say no, that nobody who plays a game for a living should be worth that much money.  Why should a guy who plays a kids' game make as much as a hundred or more brilliant scientists working to cure cancer?And if you define "worth" as a moral question, maybe that's a good point.But if you define "worth" as an economic question, it becomes a simple question of scarcity.  How many people out there have LeBron James's talents?  By our count... exactly one.  If you're an upwardly mobile owner of an NBA team, with hundreds of millions of dollars in the bank and a burning desire to win a championship, LeBron James may well be worth $20 million. Truly unique talent is extremely scarce, and thus extremely valuable.The moral of the story: cultivate a unique talent, kids.  (Of course, it also helps to be 6'8" tall, fast as a sprinter, strong as an ox, and incredibly coordinated.  But there are other kinds of talents, too, just in case you don't match that description.)
  • Households (assumed to own factors of production) sell resources to businesses & businesses pay for resources they buy from households (a business pays a worker a day’s wage)Businesses sell goods & services to households & households pay for goods and services they buy from businesses (a consumer buys a sofa from a furniture company)Factor markets (firms make factor payments)- Entrepreneurs hire labor for wages & salaries, land is provided for rent, & money is loaned by the people or investedProduct markets - When individuals receive income they spend it on goods & services offered for saleProduct markets - Businesses receive money from selling goods & services to individualsFactor Markets-This money pays for land, labor, & capital bought in these markets, then use this to produce more goods/services
  • Both the gov’t and individuals play important roles with regard to production and consumption (who decides what varies from country to country)