Economics UnitEconomics Unit

Chapter 10Chapter 10

Economics: Close to HomeEconomics: Close to Home

EconomicsEconomics

• The study of our efforts to satisfy our unlimited wants through the use of limited resources.

• Wants > Resources = Scarcity, the fundamental problem of economics!

• Scarcity forces us to make decisions:- What to produce?- How to produce it?- Who gets what is produced?

Goods – products, such as sugar, cars.Services – hairstylist, taxi

Opportunity CostOpportunity Cost

• Opportunity cost is the loss involved in choosing one thing rather than another. It is the result of scarcity!

• For example, the opportunity cost of watching the hockey game is the opportunity lost of studying for your test!

• Buying the yellow shirt instead of the red one… the opportunity cost of the yellow shirt is the opportunity lost of the red one.

• Sometimes as consumers we make the mistake of impulse buying, spur of the moment purchases, without considering opportunity cost.

Supply and DemandSupply and Demand

• Demand (consumers) – the amount consumers are willing and able to buy at a particular price.

• Supply (producers) – The amount producers are willing and able to produce at a particular price.

Demand and Supply CurvesDemand and Supply CurvesSee page 144 textSee page 144 text

Equilibrium PriceEquilibrium Price

• Equilibrium Price refers to the price at which buyers and sellers agree.

• Best for the economy because it reduces waste…. We sell what we produce!

• Law of Demand As price goes up, demand goes downAs price goes down, demand goes up• Law of SupplyAs price goes up, supply goes upAs price goes down, supply goes down

Hidden Market/Substitute Effect

InvestingInvesting

• Principal – the original sum invested

• Interest – money earned on the principal invested, (based on interest rate)

• Compound Interest – interest on your interest

Chapter 11Chapter 11The Atlantic EconomyThe Atlantic Economy

• Sectors of Our Economy

Primary Industry

Secondary Industry

Tertiary Industry

Quaternary Industry

Primary IndustryPrimary Industry

• PRIMARY INDUSTRY – activities in which people use, extract, harvest natural resources such as water, soil, fish, animals, plants, trees.

• Products are only slightly altered before they are used.• Ex: fishing, farming, mining, agriculture.• Natural Resources: materials found in the natural

environment that humans can use to satisfy their needs and wants.

• Natural resources formed the basis of the regions economy for centuries (100’s of years). Some influence our culture – ex. Fishing

• Today some primary industries are in decline but others remain important to the economy. A decline can be because of: declining resources, a change in consumer demand, or competition from other countries.

• Primary industry today is changing in the following ways:• fewer manual workers are needed• use of technology• higher skill level and education needed• Fishing – decline in ground fishing led to increase in

aquaculture (fish farming).• Forests – protect the forest by assigning each province

an allowable annual cut (AAC)• - many factors are used to calculate this (p. 162)• Mining – different types of mining are used to get

minerals out of the ground.• - minerals are manufactured into many things• Farming – includes 3 stages:• inputs – anything needed to grow the crop• process – what farmers do to bring crops to maturity• out puts – crops produced and any waste

Secondary IndustrySecondary Industry

• SECONDARY INDUSTRY – process raw materials into finished goods.

• products are manufactured into goods that are substantially different from original materials

• goods are worth more (value added).• Ex: manufacturing, construction, transportation

and utilities (hydro and gas)• Related closely to primary industry.• Ex: fishing food processing, ship building

TERTIARY INDUSTRYTERTIARY INDUSTRY

• TERTIARY INDUSTRY – enables customers to obtain and use finished products

• workers provide services rather than goods

• ex: sales, repairs, banking, insurance, tourism, hospitality, clerks, doctors

QUARTERNARY INDUSTRYQUARTERNARY INDUSTRY

• QUARTERNARY INDUSTRY – involves specialized technology

• Ex of workers: research scientists, computer software designers.

• Often grouped with Tertiary industry as workers provide services rather than goods.

Linking them togetherLinking them together

• Both tertiary and quaternary are linked to primary and secondary sectors.

• Ex: fishing – rely on weather forecasters for ocean conditions

• rely on mechanics and technicians to maintain equipment

• plant owners rely on marketing specialists to help find new opportunities to sell their fish

GDP and GNPGDP and GNP

• GDP or Gross Domestic Product is the total value of goods and services produced within a given area in a given year.

• Used to measure economic growth!• GNP or Gross National Product is the total

value of all goods and services produced by Canada in a given year, including that of Canadian companies operating in other countries.

• Entrepreneurs – people who turn ideas in businesses.

Chapter 12 – Our Economic Chapter 12 – Our Economic OutlookOutlook

• Sabian Cymbals, NB

““Trickle Down Effect”Trickle Down Effect”

Seasonal WorkSeasonal Work

• We have a resource based economy so many jobs are seasonal, where workers are employed for only part of the year.

Out migration – The Brain DrainOut migration – The Brain Drain

Transfer PaymentsTransfer Payments

• Haves……………BC, Alberta, NL

to

• Have Nots …………… All other provinces

• Equal access for all Canadians to health care and education, the 2 biggest expenditures for every province.

• AKA equalization payments, it negates economic diversity.

ACOA and NAFTAACOA and NAFTA