ECONOMICS 101Scott Acker

DEFINING

• Economics is the social science concerned with the problem of scarcity

• Scarcity?

• Scarcity is when there is not enough resources to meet demand

• Unlimited wants vs. Limited Resources

• Example: You cant buy 10 packs of gum, if the store only has 8 packs of gum available

TYPES OF ECONOMICS

• Macroeconomics- branch of economics that deals with economic theory and the economic decisions of large bodies like the government.

• Ex: Countries and their governments, trade between two countries

• Microeconomics- branch of economics that deals with behavior and decisions of smaller unit like individuals and businesses.

• Ex: families, businesses, domestic economies

ECONOMICS TERMS

• Opportunity Cost- the true cost of choosing one alternative over the other. Giving up one thing to obtain another

• Recession- a significant decline in activity across the economy that lasts longer than three months

• Inflation: the rate at which the general level of prices for goods and services is rising and causing the purchasing power to fall.

DEMAND

• The demand curve graphically shows how much of a good consumers are willing to buy at different price points

• Demand curve shows the relationship between prices and quantity demanded, holding other things constant

DEMAND GRAPH

• As you can see on the graph, at lower prices quantity demanded is much greater

SUPPLY CURVE

• The supply curve shows the amount of a good or service suppliers will be willing and able to sell at a particular time at a particular price, holding other things constant

• Supply curve is upward sloping because, all else being equal, as the price of a good rises, people are willing to sell a greater quantity of good.

SUPPLY CURVE

• As you can see in the graph, as price increases the willingness to sell increases

NEXT TIME

• We will cover what forces cause the inward and outward shift of the demand and supply curve!

• Here are some helpful sites to look at!

• http://www.amosweb.com/cgi-bin/awb_nav.pl?s=awb Amos WEB is a great site for introductory economic students

• http://www.minneapolisfed.org/community_education/student/challenge/index.cfm

• The site above provides information about a competition for students in high school economics courses. Great study tool for exams!