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Fundamental Concepts of Economics
Transcript of Fundamental Concepts of Economics
Study of human behavior in producing, distributing, and consuming material in a world of scarce resources
Why does scarcity force us to make decisions?
We determine which gives us the greatest benefit
We cannot have
CHOICES EQUAL COSTS
DO NOT ALWAYS
SCARCITY AND COSTS
FORCE US TO ASK ?'S
For whom should we produce?
Society must choose based on its population and other available markets.
What are economic "resources" ?
Steaks & Potatoes
Basic purchases include
An item that is economically useful or satisfies an economic want
It doesn’t matter if you are rich or poor, you have to deal with scarcity
the study of specific units. (Ex. Businesses or specific products)
study of large units
ex. Governments or countries
large parts of the economy
EVERYTHING WE DO
IS the fundamental problem of economics
is the condition where unlimited human wants face limited resources. (We can’t do everything we want to do with what time, money, and energy we have.)
Economics is the study of how people satisfy wants with scarce resources
the study of how we deal with scarcity.
For those who are visual learners:
THE GOLDEN RULE
everything we want
THESE QUESTIONS ARE ASKED BY INDIVIDUALS,
BUSINESSES, AND ENTIRE NATIONS
What will we produce?
Society must choose based on its need.
How should we produce it?
Society must choose based on its resources.
ESSENTIAL ECONOMIC QUESTIONS.
are required for survival
are desired for satisfaction.
House with large yard
Name Brand Clothes
work that is performed for someone
Ex. Doctor visit, legal advice, housecleaning, haircut
An item that is economically useful or satifies an economic want
Ex. A hamburger, a pencil, or a car
TYPES OF GOODS
are used to create other goods
Bulldozer, Hammer and Nails, etc.
are intended for final use by individuals
Food, Clothing, Video Games, etc.
They are tangible and can be classified as consumer/capital and durable/ nondurable
is worth expressed in dollars and cents.
Value, Utility, and Wealth
In Economics, there is sometimes a
PARADOX OF VALUE
is the accumulation of goods that are tangible, scarce,
useful, and transferable to another person. IT'S NOT JUST ABOUT $$$.
is a good’s or service’s capacity to provide satisfaction, or
simply put, its usefulness.
For something to have value, it must also have utility.
are intended to last more than 3 years
Cars, Washing Machines, Silverware, etc.
goods are intended for quick or final use and last less than 3 years...
WHAT IS IT AND HOW DOES IT APPLY TO TODAYS
GOODS MORE THAN, LETS SAY, THE GOODS YOUR
There are NO FREE
EVERYTHING HAS A COST