We want everything for free! Free T shirts at college Free samples at Sam’s Club BOGO tan Is there such a thing as “FREE”? There is no such thing as a free lunch? Very few things in life are free. CLEAN
air isn’t free! Some where along the lines someone
paid for it!!!
PROBLEMS? IN THE US?
What could be the biggest problem in the United States?
Money? NO! Scarcity, the condition that arises
because society does not have enough resources to produce all the things that people need and want!
What things are scarce?
Let’s all be millionaires! What would we buy?Would we work?Would there be enough of goods and
services?Money=no goods to buy=worthlessBread more valuable than money?
Factors of Production
1. Land, natural resources not created by human effort Examples:
Enough of beaches for everyone to vacation at once?
2. Capital, tools equipment and factories used in the production of good and services
It is a result of production Examples?
4. entrepreneurs, the risk takers in our society
The people who open their own business and take a chance at losing big
THEY ARE THE DRIVING FORCE OF OUR ECONOMY!
WANT WANT WANT WANT
Can we have everything that we want? Who has EVERYTHING that they want? Life is not fair??? Sometimes we have to make
alternative decisions called trade-offs Could involve spending or time Make quick decisions or based on
criteria Football game?
What should I do???
Go to the football game or go to work? That is the question. Well lets think about consequences with a decision making grid
They are helpful because they force you to consider a number of relevant alternatives AND CRITERIA you are basing your decision on
You can do that but it will cost you!!!! When you make a decision there is
an opportunity cost Cost means more than a price tag, if
your late for class what’s the cost? It is an alternative that is given up Wake up late for job and don’t go,
opportunity cost of staying home is the oney lost from work!
I don’t understand
Economists find it easy to explain opportunity costs with a production possibilities frontier
A diagram representing various combinations of goods/services an economy can produce when all productive resources are fully employed
I WANT WANT WANT WANT WANT IS IT FEASIBLE TO HAVE ALL WE WANT
AND NEED? WHAT IS THE DIFFERENCE BETWEEN A
WANT AND A NEED? NEED IS A BASIC REQUIREMENT FOR
LIVING A WANT IS A MEANS TO EXPRESS A
NEED EXAMPLE: I WANT A PIZZA SATISIFIES A
NEED FOR FOOD
HOW DO WE FEED OUR WANTS AND NEEDS? ARE THERE HIGHER LEVELS OF
NEEDS? HUMAN ATTENTION KNOWLEDGE
ECONOMICS IS CONCERNED WITH ECONOMIC PRODUCTS, GOODS AND SERVICES THAT ARE USEFUL, RELATIVELY SCARCE AND TRANSFERABLE TO OTHERS
TYPES OF ECONOMIC PRODUCTS A GOOD, IS AN ITEM THAT IS
ECONOMIC USEFUL OR SATISFIES AN ECONOMIC WANT, SUCH AS A BOOK OR CAR
A SERVICE, IS SOMETHING THAT IS PERFORMED BY SOMEONE ELSE FOR EXAMPLE, A HAIRCUT, OR HOME
REPAIRS
TWO TYPES OF GOODS
CONSUMER GOODS, ARE INTENDED FOR FINAL USE BY THE INDIVIDUAL
CAPITAL GOOD, IS A GOOD USED IN THE PRODUCTION FOR ANOTHER GOOD OR SERVICE
DURABLE GOOD, IS A GOOD THAT LASTS THREE YEARS OR MORE
NONDURABLE, DUH THE OPPOSITE
WE ARE ALL CONSUMERS
CONSUMERS INDULGE IN THE PROCESS OF CONSUMPTION, OR USING UP GOODS AND SERVICES TO SATISFY THEIR WANTS AND NEEDS
THEY ARE IMPORTANT BECAUSE WITHOUT THEM THE MARKET WOULD CRASH
WHEN WE PURCHASE SOMETHING, WE VOTE AND ITS POPULARITY
VALUE=$, OR DOES IT????
IN ECONOMICS WE REFER TO VALUE AS SOMETHING IN DOLLARS AND CENTS
WHY ARE SOME THINGS MORE EXPENSIVE THAN OTHERS? PARADOX OF VALUE, WHAT APPEARS TO
BE FASLE IS ACTUALLY TRUE NECESSITIES SUCH AS WATER HAVE LITTLE
MONETARY VALUE, YET A DIAMOND RING IS HIGH IN VALUE. WHY???????
IN A NUTSHELL, SCARCITY IS REQUIRED FOR VALUE
TO HAVE VALUE YOU NEED??? FOR SOMETHING TO HAVE VALUE IT
MUST HAVE: 1. UTILIITY, TO BE USEFUL OR TO
PROVIDE SATISFACTION CAN THAT VARY??? 2. SCARCITY, YOU CAN’T BUY IT ON THE
STREET
I WANNA BE RICH, LAAA LAAA LAAA!!! OH TO BE RICH, EVERYONE WANTS
TO HAVE WEALTH RIGHT?? WEALTH, IS THE ACCUMULATION OF
THOSE PRODUCTS THAT ARE SCARCE, TANGIBLE, USEFUL AND TRANSFERABBLE FROM ONE PERSON TO THE NEXT
HOW DO I GET WEALTHY??
WEALTH IS MADE POSSIBLE BY THE CIRCULAR FLOW OF ECONOMIC ACTIVITY
WHEN BUYERS AND SELLERS IN A MARKET EXCHANGE CERTAIN PRODUCTS
WE GET ECONOMIC GROWTH WHEN THE TOTAL OUTPUT OF GOODS AND SERVICES INCREASES OVER TIME
KEY FACTORS IN ECONOMIC GROWTH EFFECTIVE MARKET PRODUCTIVITY, A MEASURE OF THE
AMOUNT OF OUTPUT PRODUCED BY GIVEN AMOUNT OF UINPUT IN A SPECIFIC TIME
DIVISION OR LABOR AND PRODUCTIVITY??? HOW CAN AN ASSEMBLY LINE WORK
BETTER THAN EVERYONE HAVING TEN JOBS???
SPECIALIZATION, EVERYONE GETS BETTER AT ONE JOB RATHER THAN THREE
HUMAN CAPITAL, SUM OF THE SKILLS, ABILITIES, HEALTH AND MOTIVATION OF PEOPLE
ARE WE DEPENDENT ON ASIA, GERMANY?? YESSSSSSSSS, WE ARE
ECONOMICALLY INTERDEPENDENT, MEANING WE RELY ON OTHERS FOR GOODS AND SERVICES AND THEY RELY ON US
EXAMPLE ANYONE?????