Download What are Wants and Needs?

What is Economics?
Economics is the study of how individuals,
firms, and nations can best allocate their
limited resources in order to get what they
need and want.
What are Wants and Needs?
Wants are all goods and services one would
obtain if one wasn’t constrained by limited
resources.
Needs are all goods and services necessary
to human existence.
What are resources?
Resources are all of the things which humans can
put to productive use. Almost all resources are in
short supply. Examples include: labor, time,
information, and machines.
Natural Resources are all of the raw materials that
occur in nature and are used to produce the
things that humans need and want. Examples
include: water, land, oil, and timber.
What Happens when Resources
are Scarce?
Scarcity is a situation of having inadequate
resources to obtain wants and needs.
Scarcity results in people having to trade off. Trade
Offs are the acts of giving up one thing of value
to gain another thing of value.
Opportunity Cost is the value of the item that is lost
when one makes a trade off.
Three Fundamental Economic
Questions:
1. What will be produced?
2. How will it be produced?
3. For whom will it be produced?
What is a Market Economy?
A market economy is market in which buyers and sellers come together
to answer the three economic questions. The United States is an
example of a market economy.
They answer the three economic questions by observing supply and
demand.
Supply is when sellers determine how much of a particular good or
service they are willing to produce at different price levels.
Demand is when buyers determine how much of a good they are willing
to buy.
Producers are the people that make the goods and they determine
what price to sell them at. They must continue to make a profit in
order to produce goods.
What are supply/demand curve?
A supply curve tells us how much of the product
that sellers are willing to part with at various
price levels.
A demand curve tells us how much of the product
buyers are willing to purchase at various price
levels.
Equilibrium Price is the price at which all the
product will be sold at and all orders satisfied.
What do they look like on a
graph?
What are Surplus and Shortage?
A surplus is a situation in which the quantity
supplied is higher than the quantity
demanded. (price above equilibrium)
A shortage is a situation where the quantity
supplied is less than the quantity
demanded. (price below equilibrium)
What is a Budget?
A budget is a list of wants and needs
associated with amount of money for
each.
Substitute Goods
Substitute Goods are goods and services
that serve the same purpose and are
interchangeable.
What is microeconomics?
Microeconomics is the study of economic decisions,
making individuals economic actors (individuals, house,
firms).
Household is one unit that occupies a single household
where the people have common living expenses. Supply
labor to businesses in return for income
Firms are groups that work to produce a good/service
Government takes in money in form of taxes. Provides
public services
Land, Labor, and Capital
Land is all of the natural resources that are used to produce goods and
services
Labor is any effort a person devotes to a task for which that person is
paid
Capital is any human-made resource that is used to create other goods
and services . There are two types of capital: physical and human.
Physical Capital includes buildings and tools. Benefits of this include:
extra time, more knowledge, more productivity.
Human Capital is the new knowledge and skills a worker gains through
education and experience.
Entrepreneurs
Entrepreneurs are ambitious leaders who
decide how to combine land, labor, and
capital resources to create new goods and
services. They take big risks to develop
original ideas.
Final Questions
• What is economics?
• What is microeconomics?
• What are the three questions of
economics?
• Define land, labor, and capital
• What are the supply and demand
curves?