2. Economics
 The social science which studies how
people use their limited resources in
an attempt to satisfy unlimited wants

3. Basic Principles
wants exceed
resources necessary to obtain
them
 choices
therefore we must make
 every choice leads to a cost

4. Wants Exceed Resources
>

5. The Law of Demand
 As the price of a product
increases , the quantity
demand will fall

6. The Law of Supply
 As the price of a product rises,
suppliers will offer more for sale.

7. The Law of Supply and Demand
states:
The greater the demand
for something which is in a limited
supply, the more that thing is
worth.

8. Supply and Demand
If supply exceeds demand, prices fall. Output slows until supply is
less than demand and prices rise. The rise in price stimulates an
increase in production until a balance or equilibrium is reached.

12. http://www.irintech.com/x1/images/jean/gasprices.jpg

13. Economics plays an important role in consumer choice.

14. Think About It
After looking at the graphs on the previous slides, what is
happening to the price of gas?
What is happening to demand?
Why do you think the sales of hybrid cars is rising?

15. Cost – Benefit Analysis
 When industry has to make choices in how
to operate it employs cost-benefit
analysis
 costs of
Often the
environmental solutions
can be high