WHAT IS ECONOMICS? Scarcity, Opportunity Costs, Factors of Production
Economics <ul><li>The study of choices people make to satisfy their needs and limitless wants </li></ul><ul><ul><ul><li>Wa...
Key Assumptions of Economics <ul><li>People </li></ul><ul><ul><li>Are rationally self-interested </li></ul></ul><ul><ul><u...
The problem <ul><li>People’s economic  wants  are  unlimited … </li></ul><ul><ul><li>“ I can’t get no satisfaction…”  </li...
SCARCITY <ul><li>Scarcity occurs when wants exceed the availability of societal resources. </li></ul><ul><ul><li>Wants > R...
CHOICES <ul><li>We must make  choices  about how to use scarce resources. </li></ul><ul><ul><li>4 eggs    chocolate chip ...
Opportunity Costs <ul><li>4 eggs    Cookies  </li></ul><ul><li>Cookies </li></ul><ul><li>Opportunity cost </li></ul>The n...
<ul><li>TINSTAAFL </li></ul>THERE IS NO SUCH THING AS A FREE LUNCH IN MACROECONOMICS!
<ul><li>LAND, LABOR, CAPITAL, and ENTREPRENEURSHIP </li></ul>What are these scarce resources?
Land  labor <ul><li>NATURAL RESOURCES, </li></ul><ul><li>PAYMENT = RENT </li></ul><ul><li>HUMAN CAPITAL </li></ul><ul><li>...
CAPITAL ENTREPRENEURSHIP <ul><li>TOOLS, MACHINES, FACTORIES </li></ul><ul><li>PAYMENT = INTEREST </li></ul><ul><li>RISK-TA...
WHAT ECONOMIC CONCEPTS ARE DISCUSSED IN “BIG YELLOW TAXI” Vanessa Carlton and The Counting Crows
Questions to Consider <ul><li>What could you be doing instead of being in class? </li></ul><ul><li>What is your opportunit...
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1. What Is Economics

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Factors of Production, Trade Offs, Opportunity Costs,

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1. What Is Economics

  1. 1. WHAT IS ECONOMICS? Scarcity, Opportunity Costs, Factors of Production
  2. 2. Economics <ul><li>The study of choices people make to satisfy their needs and limitless wants </li></ul><ul><ul><ul><li>Wants can be: goods (tangible) or services (intangible) </li></ul></ul></ul><ul><ul><li>Microeconomics- the study of how individual firms deal with scarcity </li></ul></ul><ul><ul><li>Macroeconomics- the study of how society as a whole deals with scarcity </li></ul></ul>
  3. 3. Key Assumptions of Economics <ul><li>People </li></ul><ul><ul><li>Are rationally self-interested </li></ul></ul><ul><ul><ul><li>Strive to achieve their greatest satisfaction </li></ul></ul></ul><ul><ul><ul><li>Not the same as selfishness </li></ul></ul></ul><ul><ul><li>Make decisions at the margin </li></ul></ul><ul><ul><ul><li>Marginal benefit vs. marginal cost </li></ul></ul></ul><ul><ul><ul><ul><li>Buying an I Touch </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Joining a gym </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Studying in the library </li></ul></ul></ul></ul>
  4. 4. The problem <ul><li>People’s economic wants are unlimited … </li></ul><ul><ul><li>“ I can’t get no satisfaction…” </li></ul></ul><ul><ul><li>“ I just can’t get enough…” </li></ul></ul><ul><ul><li>BUT…. </li></ul></ul><ul><li>Society’s resources are scarce . </li></ul><ul><li>UNLIMITED WANTS vs. </li></ul><ul><li>LIMITED RESOURCES </li></ul>
  5. 5. SCARCITY <ul><li>Scarcity occurs when wants exceed the availability of societal resources. </li></ul><ul><ul><li>Wants > Resources </li></ul></ul>MR. RESOURCES MR. WANTS
  6. 6. CHOICES <ul><li>We must make choices about how to use scarce resources. </li></ul><ul><ul><li>4 eggs  chocolate chip cookies or brownies? </li></ul></ul><ul><li>We face costs , or tradeoffs, when we make a choice. </li></ul>
  7. 7. Opportunity Costs <ul><li>4 eggs  Cookies </li></ul><ul><li>Cookies </li></ul><ul><li>Opportunity cost </li></ul>The next best alternative use for a resource. (social, emotional, monetary, jealousy)
  8. 8. <ul><li>TINSTAAFL </li></ul>THERE IS NO SUCH THING AS A FREE LUNCH IN MACROECONOMICS!
  9. 9. <ul><li>LAND, LABOR, CAPITAL, and ENTREPRENEURSHIP </li></ul>What are these scarce resources?
  10. 10. Land labor <ul><li>NATURAL RESOURCES, </li></ul><ul><li>PAYMENT = RENT </li></ul><ul><li>HUMAN CAPITAL </li></ul><ul><li>PAYMENT = WAGES </li></ul>
  11. 11. CAPITAL ENTREPRENEURSHIP <ul><li>TOOLS, MACHINES, FACTORIES </li></ul><ul><li>PAYMENT = INTEREST </li></ul><ul><li>RISK-TAKING INDIVIDUAL WHO USES FOPS TO MAKE A PROFIT </li></ul><ul><li>PAYMENT = PROFIT </li></ul>
  12. 12. WHAT ECONOMIC CONCEPTS ARE DISCUSSED IN “BIG YELLOW TAXI” Vanessa Carlton and The Counting Crows
  13. 13. Questions to Consider <ul><li>What could you be doing instead of being in class? </li></ul><ul><li>What is your opportunity cost for taking summer school this summer? </li></ul><ul><li>What is the opportunity cost of studying one hour of Economics? </li></ul>

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