Transcript Unit1 - BBMHSSocialStudies

Bell Ringer:
What material things would
you like to own?
Make a list!
Chapter 1: What is Economics?
Activity: Make a list of all the
things you would like to own.
1.1 The Fundamental Economic Problem
 Scarcity is the condition where unlimited
human wants face limited resources.
– There’s not enough resources to produce all we
want!
 Economics is the study of how people satisfy
wants with scarce resources.
• Needs are required for survival
• Food, clothing, and shelter
• Wants are a way of expressing a need. A want
may not be required for survival.
• Pizza, house with a pool, a car with leather
TINSTAAFFFL
• There Is No Such Thing As A Free Lunch
– Even it is FREE to us, someone has to pay
for production costs.
– “BOGO”
– Sometime, somewhere you will pay for it!
Three Basic Questions
• What TO produce?
Society must choose
based on its need.
• How TO produce it?
Society must choose how
a product is made.
• For WHOM should we
produce? Society must
choose who to make it
for.
The Factors of Production
• Factors of production are resources necessary to
produce what people want or need.
• Land
• is the society’s limited natural resources—landforms,
minerals, vegetation, animal life, and climate.
• Capital
• is the means by which something is produced such as
money, tools, equipment, machinery, and factories.
• Labor
• is the workers who apply their efforts,
abilities, and skills to production.
• Entrepreneurs
• are risk-takers who combine the land, labor,
and capital into new products.
• Production
• is creating goods and services—the result of
land, capital, labor, and entrepreneurs.
The Scope of Economics
 A social science
– Study of human behavior on satisfying unlimited wants.
 Description
– Gross Domestic Product (GDP): the $ value of all final
goods and services produced in a country in 12 mths.
– Unemployment, inflation, trade, business and labor,
gov’t spending, and taxes.
 Analysis
– The “WHY and HOW” questions
 Explanation
– Answering the HOW and WHY questions
 Prediction
– How people are going to behave in the current market.
Study for 1.1 Quiz
 1) ______ is the condition where unlimited
human wants face limited resources.
 2) ______ is the means by which something is
produced such as money, tools, equipment,
machinery, and factories.
 3) _____ are required for survival.
 4) What does TISNTAAFL stand for?
 5) What are the 3 basic economic questions?
1.2 Goods, Services, and Consumers
• Economic Product
• Goods and services that are useful, scarce, and
transferable.
• Goods
• are items that are economically useful or satisfy an
economic want.
• Consumer: are intended by use by YOU!
• Capital: manufactured goods are used to produce
others goods and services.
• Durable: Lasts 3 or more years when used regularly.
• Nondurable: Lasts less than 3 years when used
regularly.
• Services
• Are product or work performed for someone
and are intangible.
• Consumers use goods and services to
satisfy wants and needs.

Why is the US called “nation of
consumption”?
Value, Utility, and Wealth
• Value
• is worth expressed in dollars and cents. Scarcity by itself is not
enough to create value.
• PARADOX of VALUE: Why do some things have more worth
than others?
• Some necessities have no value & non-necessities have value
• Utility
• is a good’s or service’s capacity to provide satisfaction, which
varies with the needs and wants of each person.
• Wealth
• is the accumulation of goods that are tangible, scarce, useful,
and transferable to another person.
• Wealth does not include services.
The Circular Flow of Economic Activity
• Markets are locations for
buyers and sellers to trade.
They are classified as local,
regional, national, global, and
cyberspace.
 A factor market is where
people earn their incomes.
• A product market is where
people use their income to
buy from producers. Product
markets center on goods and
services.
Productivity
 Economic Growth
– Occurs when a nation’s total output of goods
and services increase.
 Productivity
– Amount of output produced by a given
amount of inputs in a specific period of time.
 Division of Labor
– Work is arranged so that workers do fewer
tasks than before.
 Specialization
– The performance of tasks that can be done relatively
efficiently than others
• EX> Henry Ford’s assembly line
 Human Capital
– Sum of skills, abilities, health, and motivation of
people.
• Education, health care, continuing Ed, training
 Investing
– Businesses must invest in their employees
 Interdependence
– We rely on others and others rely on us to provide
goods and services that we consume.
• EX> Writer’s Strike, Automaker Crisis
Review Section 2 Notes
I.
II.
III.
IV.
V.
______ is the sum of skills, abilities, health,
and motivation of people.
_______ is worth expressed in dollars and
cents.
_____ __ _____ Why do some things have
more worth than others? Some necessities
have no value & non-necessities have value.
______ market is where people earn their
incomes.
______ are product or work performed for
someone and are intangible.
VI ______ are items that are economically useful
or satisfy an economic want.
VII _____ goods that last more than 3 years when
used regularly.
VIII _____ is a good’s or service’s capacity to
provide satisfaction, which varies with the
needs and wants of each person.
IX _____ is the accumulation of goods that are
tangible, scarce, useful, and transferable to
another person.
X _____ ___ ______ is when work is arranged so
that workers do fewer tasks than before.
1.3 Trade-Offs and Opportunity Cost
• Trade-offs
• are the alternative choices people face in making an
economic decision. A decision-making grid lists the
advantages and disadvantages of each choice.
• Opportunity cost
• is the cost of the next best alternative among a person’s
choices. The opportunity cost is the money, time, or
resources a person gives up, or sacrifices, to make his
final choice.
• Identifying possible alternatives allows an
economy to examine how it can best put its
limited resources into production.
• Cost-benefit analysis
• helps economists evaluate alternatives by looking at
each choice’s cost and benefit.
• The study of economics helps people understand
how a free enterprise economy makes the
WHAT, HOW, and FOR WHOM decisions.