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AIM: WHAT IS
ECONOMICS?
DO NOW: MAKE A LIST OF YOUR WANTS
AND NEEDS.
ECONOMICS
Basic elements of thinking like an economist: the process
of deciding what to buy and how much to pay for it.
Scarcity – The Basic Economic Problem
and
fundamental economic problem facing all societies,
resulting from a combination of scarce resources
people’s virtually unlimited needs and wants
Economics = social science dealing with how people satisfy
seemingly unlimited and competing wants and needs
through the careful use of scarce resources
ECONOMICS
NEED = a basic
requirement for
survival
WANT = simply
something we
would like to have
but is not
necessary for
survival
*needs & wants  expressed in terms of
economic products
GOODS =
-tangible economic product
that is useful, transferable to
others, and used to satisfy
wants and needs
1. durable good (3
years)
2. nondurable good
(wears out)
3. consumer good
(intended for
consumer)
4. capital good (a
factor of production)
SERVICES =
-work or labor
performed for
someone
(intangible)
PARADOX OF VALUE
Some necessities had a
very low monetary value
while some nonnecessities had a very
high value
Adam Smith –
Utility = the capacity to
be useful and provide
satisfaction
WEALTH
The accumulation of
products that are
tangible, are scarce,
have utility and are
transferable from one
person to another
Questions all societies face:
-What to produce?
-How to produce?
-For whom to produce?
GROSS DOMESTIC PRODUCT
GDP = the monetary value of ALL final goods,
services, and structures produced during a
one-year period
ECONOMY
Producers
-include all kinds of
businesses, individual
sellers  corporations
*Factors of production
1. Land
2. Capital
3. Labor
4. entrepreneurs
Consumers
“There is no such thing as
free lunch.”
consumerism: a
social movement that
was aimed at
promoting the
interests of
consumers
-Opportunity Cost = cost of the next best alternative (not
always measured in terms of dollars/cents
-Economic Growth = occurs when a nation’s total output of
goods and services increase over time (requires risks and
sacrifices)
-Productivity = measure of the amount of output produced in
a specific time period with a given amount of resources
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Human capital
Division of labor
Specialization
Economic interdependence
IMPROVE
MARKET
Meeting place or mechanism through which buyers and
sellers of an economic product come together. May be local,
regional, national, or global.
THINKING LIKE AN ECONOMIST
Economic Model = simplified version of a complex concept
or behavior expressed in the form of a graph, figure, equation
or diagram
COST-BENEFIT ANALYSIS = comparison of the cost of an
action to its benefits