Transcript 1_-_what_is_economics

What is
Economics?
 How
badly do I need a winter coat?
 Should we rent or buy a house?
 Who will use the family car tonight?
 Should I go to university next year or take
a year off to get a job?
 Should I cook supper or order take out?
 Should I party tonight or study for my test?
How do these questions relate
to economics?
What do you know about economics?
 Economics
can be defined as the
social science that deals with
production, distribution, and the use
of goods, money, natural resources,
and services.
 As
much as this definition seems
right we are missing an important
factor…
Xenophon (430 BC- 354 BC)
Free citizen-soldier from Athens who
studies under Socrates. Was exiled
from Athens from supporting the
Spartans. He theorized about private
estate management and wealth. He
wrote Oeconomicus which is made up of two words
that loosely translates into “to manage” and
“house”.
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
Xenophon recognized the connection between
the success of agriculture and the arts.
He also spoke of enemies as a source of wealth.
 Xenophon
recognized that in order to
maintain a successful farm he needed
laborers that were eager and obedient.
 If labourers were scarce his crop yields
would decline and so would his wealth.
Scarcity
 The
concept of scarcity is what drives the
study of economics and the very idea of
what an economy is.
 Scarcity is “an insufficient amount or
supply.”
 We can revamp our definition of
economics to simply state; economics is
the study of the way we make decisions
about the use of scarce resources.
 When
considering modern economies we
must understand that nearly everything is
scarce to some degree, including air,
sunlight, even time!
Resources
 When
we look at limited resources we need
to classify them into three categories:
1. Land - minerals, animals, vegetation, water
2. Labour – population made of Canadians
and immigrants
3. Capital - manufactured items used to
produce goods and services
Discussion

In small groups pick a resource listed below
and discuss how its scarcity may affect us
here in New Brunswick. Be prepare to share
your thoughts with the class.

Fresh Water
Oil
Trade Workers
Military
Our Climate
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Water: rare? Abundance, fresh water is an issue as
many countries are struggling to maintain source
Oil: a need to run daily life, jobs are affected when
prices increase/decrease
Trade Workers: moving out west, more expensive
here b/c lack of abundance and competition
Military: brings $ into the province, may have neg
impact on medicare, PTSD…
Climate: many seasonal jobs, large snow bird
population, min tourists,
 As
mentioned earlier Xenophon wrote
about how “good estate managers” can
benefit from one’s enemies.
 Can
you think of any situation where a
benefit can be gained from an enemy?
 Discuss
this idea with your classmates.
9/11
 On
Sept. 11th , 2001 the World Trade Center
in NYC was struck by two plane, killing an
estimate 3000 people and bringing the US to
it’s knees politically, militarily, socially and
economically.
 The WTC was a symbol of American strength
and power and therefore a target for
terrorists that sought to shake the US and
cause as much fear as possible
 Stock
markets around the world
experienced a sharp decline in investor
confidence and its recovery has been
slow and fragile. Even today the markets
have yet to truly bounce back and the US
spending on military has led to other
internal problems. Ex. Americans spend
an additional $600 a year for mortgage
payments to cover additional costs by the
military. The $341 billion spent could have
been used for infrastructure and
investments that would have improved
the American economy for its citizens.
Questions to Consider
1.
2.
3.
What was the symbolic significance of a
successful terrorist attack on the WTC?
Explain the economic significance of the
changes in stock market prices illustrated in
the previous image.
The short-term consequences of the attack
appear most significant. How could you
contradict this statement? Back up your
thoughts.
1. Attack
on what it means to be American,
shook confidence in USA. They are a
global military presence, WTC served as a
symbol of democracy, trade, power,
capitalism,
2. Lack of faith in US economy, $ being spent
just to kick start the economy
3. Still feeling impact today, travel is harder,
viewed differently
A Scarce Resource? 1. Money spent on cleaning
up Canada’s lakes to ensure that Canadians have
an adequate supply of fresh water could have
been spent on other projects such as new roads,
schools, or hospitals. 2. Canada’s tourism industry
relies heavily on an abundant supply of fresh water
especially for recreational water sports and fishing.
Agriculture and commercial fishing are also heavily
dependent on water. Pulp and paper mills rely on
rivers to get the logs to the mill.
Direct Costs/Opportunity Costs
 The
process of decision making involves
costs, which is divided into two groups:
1. Direct costs are the out-of-pocket expenses
that are required to do something.
2. Opportunity costs represent the value of the
best forgone alternative in the decision to use
a resource.
 For
example the decision to go to school
has direct costs such as the tuition fees
and costs of books.
 The
opportunity cost of going to school is
the foregone income that could have
been earned while working.
 Direct
costs also include: travel expenses
while at school, living expenses, food,…
 Opportunity costs are often related to
sacrifices you have to make. If you have
$8000 in the bank, take it out to buy a car,
however, they op cost is $400 (5% interest
per year) , this is lost because you made a
purchase and did not save the interest.
Total cost of the car is $8400
 If
a land developer decides to build on
good agricultural land then the
opportunity cost would include the
produce that could have been grown on
that land.
 Opportunity
cost is defined as the value of
the best possible alternative that is
sacrificed when resources are allocated
to a specific use.
 Here’s
a question: Would the opp. costs
for attending university differ according to
an individuals age? Program selected?
 Standard
of living refers to the level of
wealth, comfort, material goods and
necessities available to a certain
socioeconomic class in a certain
geographic area