Download Economics*.the basics

Economics….the basics
Why does scarcity force economic
decisions resulting in trade-off’s &
opportunity costs?
Economic Theory
• Economics is a theoretical discipline (based on unproven,
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but testable assumptions).
Economists make assumptions about the way producers &
consumers act & react to various incentives.
Economics touches on many other disciplines: Psychology,
sociology, history, government, & geography.
Most news events (most conflicts) are economic in nature.
BP Oil Spill, Ga Schools (Budgets), World Cup, etc.
Course Overview
 Econ has five domains (Areas of Study)
 Fundamentals - Resources, Scarcity, rational Decision making, Trade-offs, costs &
benefits, economic systems, & markets.
Domain – Microeconomics
 Understanding the factors that affect
individual markets- how producers &
consumers interact & react.
Macroeconomics
 Understanding entire economic systems; measuring economic health;
Economic problems & how policy makers address them?
International Economics
 Analyze: why we trade? The Cost & Benefits of trade? What should
we produce & what should we buy? Barriers vs. Free trade?
Comparing currencies?
Personal Finance
 You & the Economy. Building wealth? Saving & Investing? Costs &
Benefits of Borrowing (Debt)? Budgeting? Insurance?
Economic Actors
 Consumers – make economic decisions
about needs & wants.
 * What
goods & services to buy?
 * How to allocate limited resources?
 Producers – make decisions about what
goods & services to provide to consumers.
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Goods Physical objects that can be purchased (Examples:_________)
SERVICES- actions or activities that are performed for a fee (Examples:__________)
Needs vs. Wants
 Needs - Resources that are necessary for
survival. Examples _________________
 Wants - items we desire but are not
essential for survival. Examples_______
Some KEY Ideas to understand
 Costs – things you give up when you make a decision (not
the price).
 Benefits – things you gain when you make a decision.
 (ex. What are the costs & benefits of getting a college
education?)
 Market – the free exchange of goods & services (Not
necessarily a place, but the meeting of those who want to
buy with those who want to sell) .
Personal Finance
 Rational Financial Decision Making
- weighing the costs & benefits of spending & saving
decisions.
- So, rational decisions are decisions in which the benefits
outweigh the costs.
Financial Planning
- Setting long & short term goals
* Short Term – saving for clothes, weekend
* Long term – prom, spring break college, retirement,
etc.
Incentives
 Anything that helps an economic actor
make a decision
 Can be positive or negative
Economic Theory
• Economics is a theoretical discipline (based on unproven,
but testable ideas).
• Economists make assumptions about the way producers &
consumers act & react to various incentives.
• Economics touches on many other disciplines: Psychology,
sociology, history, government, & geography.
• Most news events (most conflicts) are economic in nature.
Microeconomics
 Studying the economic behavior &
decisions of small units: families, high
schools students, businesses.
 Example - Chick-fil-a or McDonalds?
 Micro decisions - How to allocate weekend
spending money?
Macroeconomics
 Behavior of entire economies (large units)
like those of entire countries, state, or
region.
 Study the impact of illegal immigration on
the U.S. economy.
 Macro Decisions - made by government
policy makers: Ex- Provide tax rebates to
citizens to jump start the economy.