Transcript What is Economics? - Plain Local Schools

What is Economics?
The study of how people and countries
make decisions about how to use their
scarce resources in the most efficient way.
 It is the study of choices
 It involves taking measurements, building
models and making predictions
 We can measure economics in different
ways: GDP, Unemployment, and CPI
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What is Economics?
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You need these basic resources to make
goods and have resources
Natural Resources: resources found on earth
(water, minerals, land, forests)
Labor: the work that people do to produce a
good or service
Capital: machines, buildings, tools, and
money
Entrepreneurship: Someone who starts a new
business or improves an old one
Technology: Not just materials but the
science and knowledge of technology
Factors of Production
Needs
Wants
Something that we
need to stay alive
 Food
 Water
 Clothing
 Shelter
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Item that is not
needed to survive but
makes life better
 New Car
 TV
 Music
What is the difference between
needs and wants?
Goods
Services
Items people buy
 Cars
 TV’s
 Bed
 MP3 players
 Phones
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Work done for other
people for a fee
 Teachers
 Doctors
 Lawyers
 Mechanics
 Store Clerks
What are goods and services?
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A problem in which wants are greater
than needs
Resources are limited, but wants are
unlimited
Scarcity is the basic problem of all
economics
Problem for individuals and businesses
We have to make choices because we
can’t have it all.
What is scarcity?
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Resources are scarce and we can’t have it
all
A trade-off is when you give up one thing
for another
Every time we make a choice we give up
the opportunity to buy or do something
else.
Ex: Extra $20, if you buy a baseball you
then can’t go out to eat with friends.
Your choices come at a cost……
What are trade-offs?
When you give up something for
something else you are doing at a cost….
An opportunity cost.
 It is the cost of the best choice, or the
choice not taken
 Ex: Going to college may delay living on
your own due to money
 Ex: Graduating from high school you have
a choice, work or school. Which one you
give up is the opportunity cost.
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What is a opportunity cost?
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Economics is about making choices
You need resources to make and have
goods.
People provide services in your daily life.
There are unlimited wants and limited
resources.
You can’t always get what you want!!!!
Wrap-Up