Unit 1: Foundations ofUnit 1: Foundations of
EconomicsEconomics
What comes to yourWhat comes to your
mind when you hear th...
What is Economics?What is Economics?
““A science that deals with theA science that deals with the
allocation, or use, of ...
OBJECTIVES 1.1OBJECTIVES 1.1
 EXPLAIN why scarcity and choice areEXPLAIN why scarcity and choice are
basic problems of ec...
What is Economics?What is Economics?
So then the big two concepts areSo then the big two concepts are
that:that:
Resourc...
VOCABULARY:VOCABULARY:
 NeedNeed
 WantWant
 EconomicsEconomics
 GoodsGoods
 ServicesServices
ScarcityScarcity
DefinitionDefinition
A situation in which the amountA situation in which the amount
of something actual...
…… MORE VOCABULARYMORE VOCABULARY
 ShortageShortage
 Factors of ProductionFactors of Production
 LandLand
 LaborLabor
...
Factors of ProductionFactors of Production
There are 4 factors that must all beThere are 4 factors that must all be
used ...
Factors of ProductionFactors of Production
There are 4 factors that must all beThere are 4 factors that must all be
used ...
Factors of ProductionFactors of Production
There are 4 factors that must all beThere are 4 factors that must all be
used ...
Factors of ProductionFactors of Production
3 Kinds of Capital3 Kinds of Capital
Physical Capital – Also calledPhysical C...
Factors of ProductionFactors of Production
3 Kinds of Capital3 Kinds of Capital
Human Capital – knowledge orHuman Capita...
Factors of ProductionFactors of Production
There are 4 factors that must all beThere are 4 factors that must all be
used ...
VOCABULARY CONTINUED…VOCABULARY CONTINUED…
 EntrepreneursEntrepreneurs
FACTORS of PRODUCTIONFACTORS of PRODUCTION
 Example of FRENCH FRIES … page 6Example of FRENCH FRIES … page 6
 IN N OUTIN...
Making Economic DecisionsMaking Economic Decisions
Every decision we make involvesEvery decision we make involves
trade-o...
PROFILE – Gary Becker!PROFILE – Gary Becker!
Read p. 7 about Gary
Becker’s thoughts about
the “marriage market”…
hmmm… The...
1.1 QUIZ – get a partner!1.1 QUIZ – get a partner!
Number your paper 1 - 6Number your paper 1 - 6
 1. Which of the follow...
Answer is …Answer is …
 a. capital and landa. capital and land
Next question …Next question …
 2. Which of the following is an example of2. Which of the following is an example of
usin...
Answer is …Answer is …
 b. building extra space in a factory tob. building extra space in a factory to
simplify productio...
next question …next question …
 3. To what part of an industry does a3. To what part of an industry does a
worker’s educa...
Answer is …Answer is …
 c. human capitalc. human capital
next question …next question …
 4. Which of the following is an4. Which of the following is an
entrepreneur?entrepreneur?...
Answer is …Answer is …
 c. a person who starts an all-organicc. a person who starts an all-organic
cleaning supplies busi...
Next …Next …
 5. What is the difference between a5. What is the difference between a
shortage and scarcity?shortage and s...
answer …answer …
 a. A shortage can be temporary or long-a. A shortage can be temporary or long-
term, but scarcity alway...
next….next….
 6. What does an economist mean by the6. What does an economist mean by the
term LAND?term LAND?
a. farmlan...
answer …answer …
 d. all natural resources used to produced. all natural resources used to produce
goods and services!goo...
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Low Soo Peng Economics Foundations

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Low Soo Peng What is Economics Foundations

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Low Soo Peng Economics Foundations

  1. 1. Unit 1: Foundations ofUnit 1: Foundations of EconomicsEconomics What comes to yourWhat comes to your mind when you hear themind when you hear the word SCARCE?word SCARCE? (video about scarcity)(video about scarcity)
  2. 2. What is Economics?What is Economics? ““A science that deals with theA science that deals with the allocation, or use, of scarceallocation, or use, of scarce resources for the purpose ofresources for the purpose of fulfilling society’s needs and wants.”fulfilling society’s needs and wants.” – Addison-Wesley– Addison-Wesley
  3. 3. OBJECTIVES 1.1OBJECTIVES 1.1  EXPLAIN why scarcity and choice areEXPLAIN why scarcity and choice are basic problems of economicsbasic problems of economics  IDENTIFY land, labor, and capital as theIDENTIFY land, labor, and capital as the three factors of production, and identifythree factors of production, and identify the two types of capitalthe two types of capital  EXPLAIN the role of entrepreneursEXPLAIN the role of entrepreneurs  EXPLAIN why economists say allEXPLAIN why economists say all resources are scarceresources are scarce
  4. 4. What is Economics?What is Economics? So then the big two concepts areSo then the big two concepts are that:that: Resources are scarce!Resources are scarce! Society has unlimited needs andSociety has unlimited needs and wants!wants! Economics decides the “best” way ofEconomics decides the “best” way of providing one to the otherproviding one to the other
  5. 5. VOCABULARY:VOCABULARY:  NeedNeed  WantWant  EconomicsEconomics  GoodsGoods  ServicesServices
  6. 6. ScarcityScarcity DefinitionDefinition A situation in which the amountA situation in which the amount of something actually availableof something actually available would not be sufficient to satisfywould not be sufficient to satisfy the desire for it, if it werethe desire for it, if it were provided free of charge.provided free of charge.
  7. 7. …… MORE VOCABULARYMORE VOCABULARY  ShortageShortage  Factors of ProductionFactors of Production  LandLand  LaborLabor  CapitalCapital  Physical CapitalPhysical Capital  Human CapitalHuman Capital
  8. 8. Factors of ProductionFactors of Production There are 4 factors that must all beThere are 4 factors that must all be used to produce anythingused to produce anything Natural Resources (also referred toNatural Resources (also referred to as “land”)as “land”)
  9. 9. Factors of ProductionFactors of Production There are 4 factors that must all beThere are 4 factors that must all be used to produce anythingused to produce anything Labor – effort of a person for whichLabor – effort of a person for which they are paidthey are paid
  10. 10. Factors of ProductionFactors of Production There are 4 factors that must all beThere are 4 factors that must all be used to produce anythingused to produce anything Capital – human-made resourcesCapital – human-made resources used to create other goodsused to create other goods
  11. 11. Factors of ProductionFactors of Production 3 Kinds of Capital3 Kinds of Capital Physical Capital – Also calledPhysical Capital – Also called Capital GoodsCapital Goods, objects that are, objects that are used to produce other goodsused to produce other goods
  12. 12. Factors of ProductionFactors of Production 3 Kinds of Capital3 Kinds of Capital Human Capital – knowledge orHuman Capital – knowledge or skills workers get from educationskills workers get from education and experienceand experience
  13. 13. Factors of ProductionFactors of Production There are 4 factors that must all beThere are 4 factors that must all be used to produce anythingused to produce anything Entrepreneurship – person whoEntrepreneurship – person who takes a risk in combining the othertakes a risk in combining the other 3 factors to create a new good3 factors to create a new good
  14. 14. VOCABULARY CONTINUED…VOCABULARY CONTINUED…  EntrepreneursEntrepreneurs
  15. 15. FACTORS of PRODUCTIONFACTORS of PRODUCTION  Example of FRENCH FRIES … page 6Example of FRENCH FRIES … page 6  IN N OUTIN N OUT
  16. 16. Making Economic DecisionsMaking Economic Decisions Every decision we make involvesEvery decision we make involves trade-offs –trade-offs – alternatives that wealternatives that we must give up when we make amust give up when we make a choicechoice Example – “I could stay up for 3Example – “I could stay up for 3 hours playing Halo, study, or sleep.”hours playing Halo, study, or sleep.”
  17. 17. PROFILE – Gary Becker!PROFILE – Gary Becker! Read p. 7 about Gary Becker’s thoughts about the “marriage market”… hmmm… Then discuss with neighbor: 1. Do you agree or disagree that economics guides even life’s most personal decisions???
  18. 18. 1.1 QUIZ – get a partner!1.1 QUIZ – get a partner! Number your paper 1 - 6Number your paper 1 - 6  1. Which of the following are factors of1. Which of the following are factors of production?production? a. Capital and Landa. Capital and Land b. Scarcity and shortagesb. Scarcity and shortages c. Technology and productivityc. Technology and productivity d. economics and business decisionsd. economics and business decisions
  19. 19. Answer is …Answer is …  a. capital and landa. capital and land
  20. 20. Next question …Next question …  2. Which of the following is an example of2. Which of the following is an example of using physical capital to save time andusing physical capital to save time and money?money? a. hiring more workers to do a job?a. hiring more workers to do a job? b. building extra space in a factory to simplifyb. building extra space in a factory to simplify productionproduction c. switching from oil to coal to makec. switching from oil to coal to make production cheaperproduction cheaper d. lowering workers’ wages to increase profitsd. lowering workers’ wages to increase profits
  21. 21. Answer is …Answer is …  b. building extra space in a factory tob. building extra space in a factory to simplify productionsimplify production
  22. 22. next question …next question …  3. To what part of an industry does a3. To what part of an industry does a worker’s education contribute?worker’s education contribute? a. technologya. technology b. physical capitalb. physical capital c. human capitalc. human capital d. scarce resourcesd. scarce resources
  23. 23. Answer is …Answer is …  c. human capitalc. human capital
  24. 24. next question …next question …  4. Which of the following is an4. Which of the following is an entrepreneur?entrepreneur? a. a person who earns a lot of money as aa. a person who earns a lot of money as a singer or dancersinger or dancer b. a person who creates a game and sells itb. a person who creates a game and sells it to a game manufacturerto a game manufacturer c. a person who starts an all-organic cleaningc. a person who starts an all-organic cleaning supplies business that employs otherssupplies business that employs others d. a person who works as a highly paidd. a person who works as a highly paid computer programmercomputer programmer
  25. 25. Answer is …Answer is …  c. a person who starts an all-organicc. a person who starts an all-organic cleaning supplies business that employscleaning supplies business that employs othersothers
  26. 26. Next …Next …  5. What is the difference between a5. What is the difference between a shortage and scarcity?shortage and scarcity? a. A shortage can be temporary or long-term,a. A shortage can be temporary or long-term, but scarcity always exists.but scarcity always exists. b. A shortage results from rising prices;b. A shortage results from rising prices; scarcity results from falling prices.scarcity results from falling prices. c. A shortage is a lack of all goods andc. A shortage is a lack of all goods and services; scarcity concerns a single item.services; scarcity concerns a single item. d. There is no real difference between ad. There is no real difference between a shortage and scarcityshortage and scarcity
  27. 27. answer …answer …  a. A shortage can be temporary or long-a. A shortage can be temporary or long- term, but scarcity always exists!term, but scarcity always exists!
  28. 28. next….next….  6. What does an economist mean by the6. What does an economist mean by the term LAND?term LAND? a. farmland onlya. farmland only b. food crops grown on farmland as well asb. food crops grown on farmland as well as the farmland itselfthe farmland itself c. goods and services that are produced formc. goods and services that are produced form the landthe land d. all natural resources used to produced. all natural resources used to produce goods and servicesgoods and services
  29. 29. answer …answer …  d. all natural resources used to produced. all natural resources used to produce goods and services!goods and services!

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