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Econ Ch 1 & 2

Mr. McComas Economics
by

Sean McComas

on 15 March 2012

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Transcript of Econ Ch 1 & 2

Economics Chapter 1
What is Economics?
The study of how individuals, families, businesses, and societies use limited resources to fulfill their needs and unlimited wants
Microeconomics
Macro Economics
economics that deals with individuals and companies (trees)
economics that deals with the economy as a whole (forest)
Needs
Wants
you only need the basic things necessary to survive
everything other then basic survival needs are wants
Vs
Scarcity
everything in this world (tangible and intangible) is limited.
Time
Food
Money
Oil
people do not have and cannot have enough income, time, and other resources to satisfy their every want.
Scarcity
Four Factors of Production
Land
Labor
Capital
Limited Resources
Entrepreneurship
all natural resources
the tools and equipment used
to create goods and services
ability to create new products
and services
(Technology)
using technology to increase
productivity any of the above.
the amount of output from
any given level of input
(Productivity)
Trade-offs
Trade-off
Opportunity Cost
Production Possibility Curve
give up one good or service
to purchase or produce another
the value of the next best alternative
given up for the alternative that was chosen
graph showing the maximum combinations
of goods and services that can be produced
from a fixed amount of resources in a
given period of time
the work people perform to
create goods and services
1 hour of studying = C
2 hours of studying = B
3 hours of studying = A
1.
2.
3.
4.
iPhones
iPod Nanos
Guns
Butter
Economic System
Traditional System
Command System
Market System
Mixed System
How to use resources to satisfy people's wants and needs

3 Questions:
What should be produced?
How should it be produced?
For whom should it be produced?
based on customs and beliefs passed
down from generation to generation

Example - Native Alaskans (Inuit)
Government makes all of the decisions

Example China
Everyone makes decisions based on their own interests

Market - freely chosen activity between buyers and sellers of goods and services

Circular Flow of Economic Activity - an economic model that pictures income as flowing continuously between businesses and consumers
Some combination of the above
Example the United States
Full transcript