Part 1
Part 1
Part 1
ECONOMICS
Choices, Choices, Choices, . . .
What is Economics?
Economics is the study of how individuals
and societies use their scarce resources to
satisfy their unlimited wants.
Scarce = limited
Resources = things used to make other
things (goods & services)
What is scarce?
Everything is scarce because our wants
ALWAYS exceed the limited resources
available.
Consumers
Good or Sevice buys things
(Output) they need or
want.
Factors of Production
Model
LAND - cotton
LABOR -seamstress
ENTREPRENEUR – GOOD – t-shirt
designer, business owner
Consumer Goods:
final products that are
purchased directly by
the consumer
Factors of Production
Payments
to factors
Land Labor Capital Enterprise
of
Productio
n
INCOME
PRODUCTION
Division of Labor –
different people
perform different jobs
to achieve greater You do your
efficiency (assembly job, and I
will do my
line). Job and we
will be
more
EFFICIENT
PRODUCTION
Specialization –
Goods are produced
efficiently
McDonald makes
burgers, not shoes!!
Scarcity
Choices
Opportunity Cost
Human wants are unlimited, but resources
are limited.
From the opportunity cost perspective, what is the cost of the order ?
+
A
Soybeans
40 Unattainable
region
B
30 Attainable
region C
20
D
10
0 E
10 20 30 38 52 60 65
Wheat
Shape: concave