CHAPTER 18WHAT IS ECONOMICS?

Be prepared to take plenty of notes.

CHOICES ALL SOCIETIES FACE

Have ready:All Chapter 18 Notes

Textbook open to Ch 18Pencil & Paper

Chart pg. 501

UNLIMITED WANTS

scarcity

LIMITEDRESOURCES

Choices All Societies Face

WHATto produce

HOW To produce

FOR WHOMTo produce

Vocabulary Wants Needs Capitalism Price System Microeconomics Macroeconomics Resources Economic System

Free enterprise Scarcity Trade Off Opportunity Cost Marginal Cost Marginal Benefit

Questions

Needs

Requirements for survival such as: Food Clothing Shelter Transportation

Vocabulary

Price System

The way most goods and services are distributed in the United States

Vocabulary

Capitalism

A system in which private citizens own much, if not all of, the means of production and decide how to use them within legislative limits.

A system in which the citizens control the factors of production

Vocabulary

Microeconomics

Economic behavior and decision- making by individuals and small businesses.

Vocabulary

Macroeconomics

Economic behavior and decision- making by large units such as governments or whole industries or societies.

Vocabulary

Wants Anything we would like to have such as:

Entertainment Vacations An item that makes life comfortable

Wants are influenced by the societies in which we live and their cultures

wants are different wants change wants can only be satisfied for a short

timeVocabulary

Resources

Things used for making goods and providing services.

Vocabulary

Economic System

A nation’s way of producing things it’s people want and need.

Vocabulary

Free Enterprise

Economic systems in which individuals and businesses are allowed to compete for profit with a minimum of government interference.

Vocabulary

Scarcity

Not having enough resources to produce all of the things we would like to have.

Vocabulary

Trade Off

Alternative you face if you decide to do one thing rather than another.

Choices all societies make in the face of limited resources.

Vocabulary

Opportunity Cost

The cost of the next best use of your time or money when you choose to do one thing rather than the other.

Vocabulary

Marginal Cost

The additional cost of producing one additional unit of output.

Vocabulary

Marginal Benefit

The additional satisfaction or benefit received when one more unit is produced or purchased.

Vocabulary

Questions

What is economics? What is an example of a need? What is an example of microeconomics? What is an example of a resource? What forces people to make economic ch

oices? What is an example of what to produce? What is an example of a marginal cost? What is an example of a want?

Economics

The study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants.

Questions

What is an example of a need?

Food Strawberries, potatoes,

pizza, etc. Clothes

Shoes, sweaters, jeans, shirts, socks etc.

Transportation Cars, bikes, bus & train

tickets etc. Shelter

House, apartment, condo,

NOT NEEDED! Restaurant food Fast food Jewelry Watches Skateboard Scooters Hot air balloon Skates El Canto del Amor Vacation home

Questions

What is an example of microeconomics?

Small businesses House hold budget Factory Individual income Auto shop Lemonade stands

NOT MICROECONOMICS!

Society Government Army Industry

Questions

What forces people to make economic choices?

Scarcity of resources

Questions

What is an example of a resource?

Gas Oil Petroleum products Air Water Soil Minerals Labor Wood

NOT RESOURCES! Vegetables Coke cans Deck House Fence Pets

Questions

What is an example of what to produce?

Computers Pencils Roads Schools Houses Cars Textbooks New manufacturing

technology

NOT EXAMPLES OF WHAT TO PRODUCE!

Rules and regulations

Principles Hiring new workers Students

Questions

What is an example of a marginal cost?

Taco Bell spent $100 making 1000 tacos How much did one taco cost to make? The marginal cost of one taco = 10 ¢

Questions

What is an example of a want?

Phones Restaurant food Fast food Jewelry Watches Skateboard Scooters Hot air balloon Skates Love shack Vacation home

THINGS WE NEED! Food Clothing Shelter Transportation

Questions

How does microeconomics differ from macroeconomics?

Microeconomics looks at decision making of small units rather than of large ones.

If the total cost of producing laptops is

$10,000, and a company produces 2,000 laptops, the

marginal cost is…Average Cost = Total Cost / Total ProducedAverage Cost = $10,000 / 2,000Average Cost = $5

Choosing to buy an I-Pad instead of something else is an example of…

A. macroeconomicsB. the total costC. a trade-offD. scarcity

Which of the following represents marginal cost?

A. The sum of fixed costs and variable costsB. Wages and raw materialsC. The cost of producing one additional unitD. Mortgage payments

According to rational decision making, we should accept an option when…

A. there are no costs.B. there are no benefits.C. the benefits outweigh the costs.D. the costs outweigh the benefits.

What kind of economy does the United States have?

Capitalism Free enterprise

The choices all societies must make about production are driven by…

A. microeconomics.B. scarcity.C. price systems.D. capitalism.

What does a cost benefit analysis compare?

A. Marginal costs and marginal benefits.B. Marginal costs and total costs.C. Total costs and revenue.D. Total revenue and marginal benefits.

The extra revenue that results from selling one more unit of the output is the…

A. marginal benefit.B. marginal revenue.C. total revenueD. average total cost.

The loss of years of income resulting from the decision to go to college is the…

A. variable cost.B. marginal cost.C. opportunity cost.D. total cost.

What is one of the economic choices which all

societies must face?

What to produce? How to produce? For whom to produce?

When does a person make a cost benefit analysis?

Rational decision making Or when making a decision

Marginal Revenue & Marginal Costs

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

$ 100

$ 0

$ 50 Marginal Cost per item

Marginal Revenue per item

The more there is the less the value is per item.