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What is Economics?
Transcript of What is Economics?
with how people satisfy seemingly
unlimited wants and needs with scarce
resources. Why in the world would I want to study that??????? Well, for one its a graduation requirement..... And secondly,
the study of economics can help you
make sense of the world you live in, and help
you to become a better citizens, consumer and member of your community. In Economics, you will often hear the terms wants and needs. A need is something you need to survive, clothing, food, shelter. A want is simply something we would like to have but its not necessary for survival. Cell phone.....NEED or WANT??? Sorry....just a want. You won't die if you don't have it. Because we have scarce resources, EVERYTHING we do has a cost. Even when you think you are getting something for free, someone pays for it. When you see "buy one get one free" the business doing this has to cover its cost somehow, so they usually up the price of something else. Government handouts that people deem as free (ie, cellphones, food stamps etc) are being paid for through taxes collected from other citizens. Economist use the the phrase TINSTAAFL- There is no such thing as a free lunch- to describe this concept. OK so far we have determined that we, like all other humans on the planet, have unlimited wants, but we have scarce resources. So Economics is the study of how we try to satisfy our wants with these limited resources.
Resources are scarce so we have to make careful choices about how we use them.
Can you think of some scarce resources in our country? Water Land...there is a limited amount of land. We can't make more land, right? So we have to decide how to use what we have to meet all of our needs/wants. Like growing food, building houses, etc. Oil used to make gas is a scarce resource and we seem to have an unlimited need for gasoline. We have to determine what is the most efficient way to take oil and produce gas to supply people with fuel for their cars. So how do we decide to allocate our resources? By asking ourselves the THREE BASIC QUESTIONS of economics. What to Produce? How to Produce? and For Whom to Produce? Should a society direct most of its
resources to the production of military
equipment? Some countries do, for
example North Korea. Or should a
country direct its resources to growing
food, producing clothing? A society cannot
have everything its citizens want so
must decide WHAT to produce. How to produce is the next questions that
societies must answer. Should we use
automated productions methods that require
robots instead of people? Next a society must decide for whom to produce. Does a society produce homes for low income families, or high income families? If there is not enough houses for
everyone, a society has to make a choice about who will receive the existing supply.