Chapter 1
What is
Economics?
"Economics
is all about making choices."
Vocabulary
Wants desires
Utility provides
satisfaction
Resources used to produce goods and
services
Goods tangible products
Durable goods lasts 3 or more years
Nondurable goods lasts less than 3
years
Services intangible products
Consumers use goods and services
Scarcity unlimited wants and
limited resources
Economic value
both scarce and has utility
The reason for economics:
"You Can't Always Get What You
Want"
Scarcity => Choices => Opportunity
Costs
Economics is the study of people
making decisions trying to satisfy their wants in a world of scarcity.
TINSTAAFL
Economies answer three questions:
What to produce and in
what quantity?
How to produce goods and
services?
Who produces and who receives
goods and services?
Factors of Production aka Resources
Land (natural)
Labor (human)
Capital
(tools and equipment; used
for production of other goods and services)
Financial Capital is
used to buy tools and equipment
Entrepreneurship (creative)
The Circular Flow Model
Productivity
Economic
growth
Productivity
Human Capital
Division of Labor
Specialization
Economic Interdependence
Oh, The Choices
We Make
Trade Offs
Costs and Benefits
Production Possibilities