![Page 1: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/1.jpg)
Economics Notes Chapter One
Scarcity – the fundamental problem facing all societies.
It is the condition that results from society not having
enough resources to produce all the things that people
would like to have.
Economics – the study of how people try to satisfy what
appears to be unlimited wants and needs with
limited/scarce resources
Need – basic things for survival
Wants – way of expressing a need
![Page 2: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/2.jpg)
SOCIETY HAS VIRTUALLY UNLIMITED WANTS...
![Page 3: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/3.jpg)
NECESSITIES
Food Clothing Shelter
Luxuries
V.
Gump Household
![Page 4: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/4.jpg)
“There is no such thing as a free Lunch”
No matter what you think you may have gotten for free, it cost
something to someone.
![Page 5: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/5.jpg)
Opportunity CostCost of the next best alternative use of
money, time or resources when one choice is made rather than another
![Page 6: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/6.jpg)
Three main economic choices1. What to produce2. How to produce
3. For whom to produce
![Page 7: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/7.jpg)
Three main economics questions
![Page 8: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/8.jpg)
Factors of Production
![Page 9: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/9.jpg)
Factors of productionResources required to produce the thing we would like to have
1. Land – gifts of nature – natural resources – not created by humans
2. Labor- elbow grease – people efforts, abilities and skills (everyone except for entrepreneurs)
3. Capital – tools, equipment, machinery, and factories used to produce goods and services
4. Entrepreneurs – responsible for much of the changes in the economy, risk takers in search of new profits using existing resources. People who start their
own businesses
![Page 10: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/10.jpg)
.
Real Capital v. Financial Capital
FINANCIAL CAPITAL[stocks, bonds, and money]
REAL CAPITAL[tools, machinery, & factories]
Can produce something
directly with these
Can’t produce anything
directly with these
![Page 11: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/11.jpg)
Production – can only take place once all
three factors of production are in place
Gross Domestic Product – GDP
dollar value of all goods, services and
structures produced within a countries’
borders
GNP – Gross National Product
everything that a country produces within and
outside of its own borders
![Page 12: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/12.jpg)
Goods – an item that is economically useful or satisfies an economic want, it is something that is tangible
Consumer good – used by an individual
Capital good – used to produce a consumer good
Durable good – anything that gets regular use and lasts more than three years
![Page 13: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/13.jpg)
Good Service
Mechanic giving car a tune-up
![Page 14: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/14.jpg)
Trade Offs – alternative choices made by consumers in the market place
Services – work that is performed for someone
Value – worth that can be expressed in dollars and cents
![Page 15: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/15.jpg)
Good Service
Watch
![Page 16: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/16.jpg)
Wealth – accumulation of those products that are tangible, scarce, useful and transferable from one person to another.
Liquid – can be turned into cash quickly
Standard of Living – quality of life based on the possession of the necessities and luxuries that make life easier
![Page 17: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/17.jpg)
Which Flow Represents?A. Goods/services?B. Consumer expenditures?C. Land, labor, capital and
entrepreneurial ability?D. Rent, wages, interest,
and profits? Households
Product Market
Resource Market
1
2
3
4
Businesses
Labor
Fuzzy Wuzzy
431
2
BusinessesBusinessesBusinesses
![Page 18: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/18.jpg)
Adam Smith
Scotland
1723-1790
Sp
ecia
liza
tio
n
The Invisible
Hand
![Page 19: Economics Notes Chapter One · Economics Notes Chapter One Scarcity –the fundamental problem facing all societies. It is the condition that results from society not having enough](https://reader036.vdocuments.site/reader036/viewer/2022062507/5fd3cc5df747586204042b0c/html5/thumbnails/19.jpg)