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YODER | ch.1: what is economics? | ECONOMICS


Ryan Yoder

on 24 August 2012

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Transcript of YODER | ch.1: what is economics? | ECONOMICS

chapter 1 what is economics? the circle of economics HUMAN WANTS 1. PHYSICAL 2. PSYCHOLOGICAL neccessary to maintain our health and safety
these will change at different stages of life
FOOD, CLOTHING, AND SHELTER not necessary to exist
make people feel better and make you happier
influences by culture or society
NEW CLOTHES, TECHNOLOGY, CARS influences SOCIETY: tv, commercials, ads,
magazines, movies, etc.

FAMILY: parents, grandparents,
or well off family members farmers grow
and harvest corn use fertilizers and
tractors are produced around the country the corn gets stored
at grain elevators shipped to
cereal company machinery designed,
and maintained equipment boxes made for
packaging printed, cut,
and folded box filled with flakes
from workers at factory shipped to
supermarket you
buy want satisfaction chain VOLUNTARY EXCHANGES
FREE MARKET U.S. GOVERNMENT INVOLVMENT? does the government get involved when
voluntary exchange is taking place? 1. give specific examples of how? 2. created fannie by FDR in 1938
worked so good freddie was created in 1970
knew government would not let it fail
september 2008 government take over
$5 trillion in mortgage libilities congress created in 1970
created as a for profit corporation
recieved over 30 billion from government
Sunset Limited (47.5 hour trip):
- Govt cost = $466
- Seat cost = $133 ($2.80 per hour) post office department
changed in 1971 into govt corporation
saturday mail ($500 million per year) since 1977
2008 lost 2.8 billion & 2009 expects to lose $3 - 6 billion july 2009 filed chapter 11 bankruptcy
majority owned by US treasury and Candian government
$57.6 billion invested under TARP where does voluntary exchange take place? arrangement that allows
people to make exchanges
unaltered gifts of nature
ex: minerals, timber, land
and fresh air

or labor, the physical and mental
efforts people use to create goods
and services

buildings, tools, and machines used to
produce other goods and services entrepreneurship imaginative thinking, willing to take risks,
managment/organizational skills needed scarcity
opportunity cost are there enough
goods for everyone? NO, this is known as scarcity result of an inability to satisfy
all of everyone's needs scare items in your life money, time and other resources SCARCITY = Wants > Available Resources can an item be
plentiful and scarce? Have scare resources
always been scare? the highest valued alternative given up as a
result of making a choice economic way of thinking #1 scarcity forces people to choose scarcity forces people to
make choices. businesses,
people, and the government
make them everyday. #2 all choices involve alternatives people have to give up something
important in order to gain something
important. this happens through
the cost - benefit analysis. #3 people try to make good choices we value time and money
and try to make good choices.
example: credit card debt #4 people respond to incentives positive rewards for making some
kind of choice or behaving in a
certain way #5 people gain when they
trade voluntarily exchanging goods for something else
and when they trade they believe they are better off. voluntary trade is part of a free market. #6 choices are future oriented making a choice for what you
believe will be right for you
in the future #7 our choices are influenced by
the choices of others global
economy/society choice - making by businesses what motives
businesses? PROFITS: positive difference b/t
total cost and total sales most profitable businesses U.S. ECONOMY 1. MARKET ECONOMY
relies on voluntary trade as primary means of organizing & cordinating production

means of production and distribution are privately/corporate owned
development is proportionate to the accumulation and reinvestment of profits gained

characterized by private ownership of property and productive resources
motivation is profit, competition ensures efficiency, supply/demand direct production distribution of goods/services who decides what goods/services are produced? CONSUMERS by what goods/services we purchase
this signals businesses what they should produce
EXAMPLES: certain lines, styles, items on menu 2 BRANCHES OF ECONOMICS 1. MACROECONOMICS
study of the economy as a whole
unemployment, poverty, economic growth

study of individual consumers/businesses
individuals, families, business choices #1 in 2010 $19.3 billion MARKETS BLACK FRIDAY $14.6 billion #2 $14.3 billion #3 #4 $13.4 billion international business machines $13.4 billion #5
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