Economics101
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  • 1. Economics 101 Unit 4 Notes
  • 2. What Does “Economics” Mean?
    • --Economics is the study of MONEY!
  • 3. Needs & Wants
    • --We all must have a certain amount of food, water, clothing, & shelter to survive—NEEDS!
    • --Anything beyond these needs is a WANT
    • -- Need : something required for survival; well defined & limited
    • -- Want : something desired; endless
  • 4. Opportunity Costs
    • --People have limited incomes ; this forces us to make choices about how to spend our money
    • --Every choice has costs
    • --Economists also count the “choice” we didn’t make as the opportunity cost , or trade-off
    • -- Opportunity Cost : the thing that is given up when something else is chosen
  • 5. What Do We Spend $ On?
    • --How people spend their limited resources depends on their needs, likes and dislikes, income, available substitutes, and the price of goods they want
    • -- Goods: any manufactured product, like food, shoes, TVs, etc.
  • 6. What Does This Mean for Businesses?
    • --Like people, governments and businesses face limits and must make choices
    • --Businesses have limited profits , and countries have limited resources
    • --Resources include workers, money from taxes, natural resources, & machinery
    • --Because everyone faces limited resources, or scarcity , everyone makes choices
    • -- Scarcity : not enough resources, time, or money for all needs and wants
  • 7. Economic Choices
    • INDIVIDUALS:
    • --Some choices individuals make include:
    • --whether to save or spend their money
    • --how to spend their money
    • --how to divide their time between work and leisure
  • 8. Economic Choices
    • BUSINESSES:
    • --Businesses have to decide what to make, how much of it to make, how to make it, and what to do with their profits
    • -- Profits: money earned beyond the cost of making and selling the product
    • --Profits can be taken as owner income, divided among workers, or invested in the business
    • -- Invested : to commit money with the hope of making more money
  • 9. Economic Choices
    • GOVERNMENTS Must Decide:
    • --which natural resources to preserve and which to sell
    • --how much to tax
    • --how to spend the nation’s income
    • --between spending on things such as the military, education, roads, health services, etc.