Welcome to Economics! Monday January 2016 Get out a piece of paper for your first notes!
Vocab Activity Go around and ask 3 people what they think is the definition to the word on the front of the card you were given. Write down what they say on the post-it note on the back Meet with the other people who have your vocab word. Make up a definition from what you were told.
So what is economics all about? Economics can be defined as the study of the utilization/allocation of scarce resources in the production, distribution, and consumption of goods and services to address the problem of scarcity. So in real world terms that means How we use resources to make, buy and distribute goods and services while using the least amount of resources?
Important terms Scarcity (not scar city)- when there is not enough of something Goods- Things you can touch (tangible items) What are some examples? Services- Things you cannot touch (intangible items) What are some examples? Resources- Things we use to make products In economics there are four categories, called factors of production: Land Labor Capital Entrepreneurship
Scarcity Do you think that scarcity is a problem that we deal with today? Have all societies (past, present, and future) dealt with scarcity? So if there is scarcity, how do we decide what to make? Capital goods- goods that make other goods Consumer goods- goods that consumers want
Scarcity Do we produce the goods that consumers are willing and able to purchase or do we produce the goods that government decision makers select? Guns or butter? How are the resources to be utilized? Will we focus on labor-intensive methods? How will the goods be distributed once they are produced? Will everyone share equally in the output that is produced or will some receive more than others?
Capital vs. Consumer Goods So do we produce things we want or things that make other things? What is the difference between capital vs consumer goods? Capital goods: goods that make other goods Do we want, as consumers, capital goods? They satisfy wants indirectly Consumer good: goods we want What will happen if we choose to produce all consumer goods? Satisfy wants directly
Do all societies deal with scarcity the same way? How do we decide what, how, and for whom? We have capitalism. That means the market decides the what, how and for whom questions. Supply and Demand Are there other ways? Communism That means that the government controls the people and the factors of production. The government decides the what, how and for whom.
Important people Adam Smith The father of capitalism He wrote a book, The Wealth of Nations He believed that the market could do a better job determining prices, what to produce, how to produce it, and who gets it. Karl Marx The father of communism and socialism He believed that the people as a whole should control the factors of production, not the elite few Problems?
Copy down these few vocab words Durable Goods- a good that last longer than three years when use regularly. TINSTAAFL- There is no such thing as a free lunch. Means that every economic decision has a cost involved. Productivity- the efficient use of resources in the production process.
True economies? Do you think that there is true, pure capitalistic or communistic economies today? NO, most economies today are a combination, a mixed economy. That means that a economy is mostly market, but has varying degrees of governmental control.
Scarcity, trade-offs Because there is scarcity, we cannot have everything we want, so we have to make choices When you give something up to get something else, that is called a trade off. To get A, you must give up B
Opportunity cost Economist go a step farther than just looking at what you get and give up, they look at what else you could have done. If you don t go to college, what else could you do? Economist call the foregone opportunity an opportunity cost. Opportunity cost is defined as: Foregone opportunity Most valued alternative not taken What you or society must give up when making a choice