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1. ECONOMIC
FOUNDATIONS
Explain the concept of economics and economic activities

2. ECONOMICS
The study of how
to meet
unlimited,
competing wants
with limited
resources.

3. Economic Activities:
1. Consumption
2. Production
3. Exchange
4. Distribution

4. Consumption
The process or
activity of using
goods and
services

5. Production
• The making of
goods and
services
• Goods and
services must be
made in order
for consumption
to occur.

6. Exchange
Paying
resource
owners for
use of their
resources.
•Wages
•Salaries
•Profits
•Interest
•Rent
•Prices
The process
of trading
one
good/service
for another.

7. Distribution
The process or activity by which
income is divided among resource
owners and producers.

8. Wants
- Desires
Needs
- Something necessary; essential

9. Goods: Tangible objects that can
be manufactured or produced for
resale.
Services: Intangible objects that
can be sold.
•Consumer
•Industrial

10. Consumer goods: Products that
are useful to consumers
Consumer services:
Acts performed for
the consumer for a
fee.

11. Entrepreneurship
Skills of people willing
to take the risk of
starting their own
business.

12. Scarcity
A condition that
exists when there
are not enough
goods or services
available to meet
the wants and needs
of consumers.

13. Basic economic questions
•What goods and services should be
produced?
•How should the goods and services
be produced?
•For whom should the goods and
services be produced?