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Economics Unit
Chapter 10
Economics: Close to Home
Economics
• The study of our efforts to satisfy our unlimited wants through the
use of limited resources.
• Wants > Resources = Scarcity, the fundamental problem of
economics!
• Scarcity forces us to make decisions:
- What to produce?
- How to produce it?
- Who gets what is produced?
Goods – products, such as sugar, cars.
Services – hairstylist, taxi
Opportunity Cost
• Opportunity cost is the loss involved in
choosing one thing rather than another. It is the
result of scarcity!
• For example, the opportunity cost of watching
the hockey game is the opportunity lost of
studying for your test!
• Buying the yellow shirt instead of the red one…
the opportunity cost of the yellow shirt is the
opportunity lost of the red one.
• Sometimes as consumers we make the mistake
of impulse buying, spur of the moment
purchases, without considering opportunity cost.
Supply and Demand
• Demand (consumers) – the amount
consumers are willing and able to buy at a
particular price.
• Supply (producers) – The amount
producers are willing and able to produce
at a particular price.
Demand and Supply Curves
See page 144 text
Equilibrium Price
• Equilibrium Price refers to the price at which buyers
and sellers agree.
• Best for the economy because it reduces waste…. We
sell what we produce!
• Law of Demand
As price goes up, demand goes down
As price goes down, demand goes up
• Law of Supply
As price goes up, supply goes up
As price goes down, supply goes down
Hidden Market/Substitute Effect
Investing
• Principal – the original sum invested
• Interest – money earned on the principal
invested, (based on interest rate)
• Compound Interest – interest on your
interest
Chapter 11
The Atlantic Economy
• Sectors of Our Economy
Primary Industry
Secondary Industry
Tertiary Industry
Quaternary Industry
Primary Industry
• PRIMARY INDUSTRY – activities in which people use,
extract, harvest natural resources such as water, soil,
fish, animals, plants, trees.
• Products are only slightly altered before they are used.
• Ex: fishing, farming, mining, agriculture.
• Natural Resources: materials found in the natural
environment that humans can use to satisfy their needs
and wants.
• Natural resources formed the basis of the regions
economy for centuries (100’s of years). Some influence
our culture – ex. Fishing
• Today some primary industries are in decline but others
remain important to the economy. A decline can be
because of: declining resources, a change in consumer
demand, or competition from other countries.
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Primary industry today is changing in the following ways:
fewer manual workers are needed
use of technology
higher skill level and education needed
Fishing – decline in ground fishing led to increase in
aquaculture (fish farming).
Forests – protect the forest by assigning each province
an allowable annual cut (AAC)
- many factors are used to calculate this (p. 162)
Mining – different types of mining are used to get
minerals out of the ground.
- minerals are manufactured into many things
Farming – includes 3 stages:
inputs – anything needed to grow the crop
process – what farmers do to bring crops to maturity
out puts – crops produced and any waste
Secondary Industry
• SECONDARY INDUSTRY – process raw
materials into finished goods.
• products are manufactured into goods that are
substantially different from original materials
• goods are worth more (value added).
• Ex: manufacturing, construction, transportation
and utilities (hydro and gas)
• Related closely to primary industry.
• Ex: fishing  food processing, ship building
TERTIARY INDUSTRY
• TERTIARY INDUSTRY – enables
customers to obtain and use finished
products
• workers provide services rather than
goods
• ex: sales, repairs, banking, insurance,
tourism, hospitality, clerks, doctors
QUARTERNARY INDUSTRY
• QUARTERNARY INDUSTRY – involves
specialized technology
• Ex of workers: research scientists,
computer software designers.
• Often grouped with Tertiary industry as
workers provide services rather than
goods.
Linking them together
• Both tertiary and quaternary are linked to
primary and secondary sectors.
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Ex: fishing – rely on weather
forecasters for ocean conditions
• rely on mechanics and technicians to
maintain equipment
• plant owners rely on marketing specialists
to help find new opportunities to sell their
fish
GDP and GNP
• GDP or Gross Domestic Product is the total
value of goods and services produced within a
given area in a given year.
• Used to measure economic growth!
• GNP or Gross National Product is the total
value of all goods and services produced by
Canada in a given year, including that of
Canadian companies operating in other
countries.
• Entrepreneurs – people who turn ideas in
businesses.
Chapter 12 – Our Economic
Outlook
• Sabian Cymbals, NB
“Trickle Down Effect”
Seasonal Work
• We have a resource based
economy so many jobs are
seasonal, where workers are
employed for only part of the
year.
Out migration – The Brain Drain
Transfer Payments
• Haves……………BC, Alberta, NL
to
• Have Nots …………… All other provinces
• Equal access for all Canadians to health care and education, the 2
biggest expenditures for every province.
• AKA equalization payments, it negates economic diversity.
ACOA and NAFTA