1.1 Simply put, economics is the study of the choices that people make to satisfy their needs and wants. Economist: person who studies economics Microeconomics: study of choices made by economic actors such as households, companies, and individual markets. Macroeconomics: studies the behavior of entire economies. Consumers: people who decide to buy things Producers: People who make things Goods: physical objects that can be purchased Services: actions or activities performed for a fee.
1.1 Factors of production: resources that can be used to produce goods Natural resources: nature helps to produce goods and provide services Human resources: when humans put in effort during production Capital resources: the manufactured materials used to create products. Capital goods: buildings, structures, machinery, and tools used in the production. Entrepreneurship: organizational abilities mixed with risk taking involved in starting a new business or selling a new product.
1.1 To develop a new mix of the other factors of production, creating something of value. Entrepreneur – a person who attempts to start a new business or produce a new product. Ex. Michael Dell, helped make computers more affordable by starting Dell, which sold their computers by phone or online. They are now the world’s top direct seller of computers.
1.2 Itforces people to make decisions about how to use resources effectively. Scarcity: the combination of limited resources and unlimited wants.
1.2 What to produce: sometimes the producer must choose which need is more urgent. How to produce: managing your options of ways of production, people or machine? For whom to produce: the way the product is built depends on who is using it. Allocate: another word for distribute
1.2 To determine if resources are being used wisely. Productivity: the level of output that results from a given level of input. Efficiency: use of the smallest amount of resources to make the biggest amount of output. Division of labor: assigning a small amount of tasks to each worker. Specialization: the focus on one activity
Sacrifice is an important element of economic choice because once you use one resource to produce, you can’t use that one resource again. (unless its renewable) Trade-off: another term for sacrifice Opportunity cost: the value of the next best alternative that is given up to obtain the preferred item.
1. the amount of available resources and technology will NOT change during the period being studied. 2. all of the natural, human and capital resources are being used in the most efficient manner possible. Production possibilities curve: shows all of the possible combinations of two goods or services that can be produced within a stated time period.
Advances in technology Resource availability If the curve moves right, technology improvements have been made or there are more resources available Curve moves left, less resources