- Economics is the study of how individuals, businesses, and governments make choices with limited resources due to scarcity. Scarcity means not having enough resources to satisfy all wants. - People must choose how to spend their limited incomes between needs like food and shelter or wants. Businesses must decide what and how much to produce given limited profits. Governments face limits in resources and must allocate tax money. - Opportunity cost is the best alternative given up when making a choice. For example, the opportunity cost of going to college is work experience or money earned from a job. All economic choices involve evaluating costs and benefits.

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.