Post on 30-Dec-2015
What is Economics?
Economics
Study of how people seek to satisfy their needs and wants by making choices.
Dissecting the DefinitionNeeds: something like air,
food, shelter that is necessary for survival
Wants: an item that we desire but that is not essential to survival
Additional Info/Vocabulary TermsAllocate
to divide among or distribute in shares
Activity
In your groups, answer as many questions correctly as you can. Each correct answer gets bonus points for your team!
Now, decide how you would allocate your bonus points between your group members How many different ways could you allocate your
resources? Which method did you choose and is it fair? Is every member of your group satisfied?
Additional Info/Vocabulary TermsResources
the means to accomplish something
Econ’s No.1 Problem… Scarcity:
When there is not as much of a good or service as everyone wants. Do you have as much money as
you could possibly want? When the new iPad/iPhone hits
the market, is it immediately available for everyone?
How do you deal with scarcity? Everyday you are making tons of economic
decisions; more commonly referred to as choices. What are some choices you have made today?
This week? This year? What information do you weigh when making
a decision or choice? Want vs. Need, cost, efficiency, items you are
missing out on, etc.
Dissecting choices
Trade-Off: giving up some of one thing to obtain more of the next best alternative
Opportunity Cost: what was given up in a trade-off, the next best alternative
Which would you choose? You have 1000$ in graduation money…..1) Buy new clothes2) Buy “stuff” for your car3) Take a vacation before college
What was your second choice?1) Buy new clothes2) Buy “stuff” for your car3) Take a vacation before college
MicroeconomicsStudy of economic behavior
& decision making of small units, such as individuals, families, & businesses
Individual decision making is micro (small)
MacroeconomicsStudy of economic behavior & decision making of entire economies
Examines major trends for the economy as a whole
Societal decision making is macro (large)
Three Basic Questions??? In economics there are 3 basic
questions that every country must answer…What to produce?How to produce?For whom should we produce?
Economic SystemsA set of rules by which a
nation answers the basic questions of what, how, and for whom.
Types of Economic SystemsTraditionalCommandMarketMixed
Traditional Decisions are based mostly on
customs
Difficult to change Mostly in underdeveloped
countries/3rd world countries Example: Chad
TraditionalAdvantages versus
Disadvantages Advantages Low
unemployment rate Little or no money
is used
Disadvantages Not much
economic growth Little scientific
development No choices Low standard of
living
Command Government ownership & control
of production Government makes ALL
decisions 2 main types Socialism &
Communism Example: North Korea
CommandAdvantages versus
Disadvantages Advantages Focuses on
Equality Capable of rapid
change Economies are
very stable
Disadvantages Very little individual
freedom No reason for hard
work
Market Means of production are owned &
controlled by private individuals or groups
Government plays a small role Market determines how resources
are used Cannot be found today
MarketAdvantages versus
Disadvantages Advantages Can adjust easily to
change Competition No government
interference Unlimited
opportunities to make money
Disadvantages Society does not
always get basic needs
Higher risk for failure
Monopolies are present
Mixed Government plays limited but some role in
decision making Focuses on Free Enterprise System Usually 70% individual control & 30%
government control Sometimes other way around but very rare
Example: United States
Additional Info/Vocabulary TermsDivision of Labor
Separate the process of production into specific tasks
Additional Info/Vocabulary TermsSpecialization
Concentrate labor on single tasks