economics unit i: intro to economics part 1 – basic economic concepts
TRANSCRIPT
Economics Unit I:Economics Unit I:Intro To EconomicsIntro To EconomicsPart 1 – Basic Economic ConceptsPart 1 – Basic Economic Concepts
What is Economics?What is Economics?
The Study of how we make The Study of how we make decisions in a world in which decisions in a world in which resources are limitedresources are limited
What is the difference What is the difference between Microeconomics between Microeconomics and Macroeconomics?and Macroeconomics?
MicroeconomicsMicroeconomics
looks at the small picture, looks at the looks at the small picture, looks at the decision making of individuals and decision making of individuals and small businessessmall businesses
MacroeconomicsMacroeconomics
looks at decision making by societies, looks at decision making by societies, industries and governmentsindustries and governments
What is an economic What is an economic system?system?
A way a group of people produce the A way a group of people produce the things they want and needthings they want and need
What is a need?What is a need?
Something someone Something someone has has to have to to have to livelive
What is a want?What is a want?
Something someone would like to Something someone would like to have; a luxuryhave; a luxury
What does scarcity refer What does scarcity refer to?to?
Not having enough resources Not having enough resources to produce all the things we to produce all the things we would like to havewould like to have
What is the difference What is the difference between scarcity and between scarcity and shortage?shortage? Scarcity means limited; Scarcity means limited;
shortage means in short shortage means in short supplysupply
Why is economics called the Why is economics called the “Science of Decision “Science of Decision making?”making?”
Because all resources are limited we Because all resources are limited we have to make decisions about how to have to make decisions about how to use them use them
What is a trade off?What is a trade off?
Exchanging one thing for another; Exchanging one thing for another; giving up something to get somethinggiving up something to get something
What is an opportunity What is an opportunity cost?cost?
‘‘Opportunity Lost’ – the value of the Opportunity Lost’ – the value of the next best alternative use of money or next best alternative use of money or time when a decision is madetime when a decision is made
What is meant by the What is meant by the factors of production?factors of production?
The resources necessary to produce The resources necessary to produce goods and servicesgoods and services
The Four Factors of The Four Factors of ProductionProduction
Land Land Labor Labor Capital Capital Entrepreneur Entrepreneur
LandLand
natural resources; unaltered by mannatural resources; unaltered by man
LaborLabor
human resources; mental and human resources; mental and physical workphysical work
CapitalCapital
manufactured tools used to make manufactured tools used to make other goodsother goods
The EntrepreneurThe Entrepreneur
the organizer, risk taker; person who the organizer, risk taker; person who starts own business, inventsstarts own business, invents
Four Basic Economic Four Basic Economic QuestionsQuestions
What to produce?What to produce? How to produce?How to produce? For whom to produce?For whom to produce?
What influences how What influences how we use our we use our resources?resources?
Marginal BenefitsMarginal Benefits
How much additional satisfaction we How much additional satisfaction we get when one more unit is producedget when one more unit is produced
Marginal CostMarginal Cost
The additional cost of producing one The additional cost of producing one more unitmore unit
Cost-Benefit AnalysisCost-Benefit Analysis
Comparing the marginal benefits to Comparing the marginal benefits to the marginal costs of a decision the marginal costs of a decision