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Unit One, Lesson One Unit One, Lesson One
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Unit one, lesson one

Nov 28, 2014

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Alicia Ross

 
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Page 1: Unit one, lesson one

Unit One, Lesson One Unit One, Lesson One

Page 2: Unit one, lesson one

What is Economics?What is Economics?

The study of how people, firms, and The study of how people, firms, and societies choose to allocate scarce societies choose to allocate scarce resources with alternative uses.resources with alternative uses.

Page 3: Unit one, lesson one

What is Scarcity?What is Scarcity?

The condition that exists because The condition that exists because human wants exceed the capacity of human wants exceed the capacity of available resources to satisfy those available resources to satisfy those wants.wants.

Page 4: Unit one, lesson one

MacroeconomicsMacroeconomics

The study of the functioning of the The study of the functioning of the economy as a whole, and it deals economy as a whole, and it deals mainly with the total level of output mainly with the total level of output and income of the economy, the total and income of the economy, the total level of employment, and movement level of employment, and movement in the average level of all prices.in the average level of all prices.

Page 5: Unit one, lesson one

MicroeconomicsMicroeconomics

Study of the behavior of individual Study of the behavior of individual households, firms, and markets, of households, firms, and markets, of how prices and outputs are how prices and outputs are determined in those markets, and of determined in those markets, and of how the price mechanism allocates how the price mechanism allocates resources and distributes income.resources and distributes income.

Page 6: Unit one, lesson one

Wants v NeedsWants v Needs

Needs include food, clothing, and Needs include food, clothing, and sheltershelter

Wants are everything else; desires Wants are everything else; desires that can be satisfied by consuming a that can be satisfied by consuming a good or service.good or service.

Some economists believe that health Some economists believe that health care and basic education are also care and basic education are also needs.needs.

Page 7: Unit one, lesson one

What are resources?What are resources?

What is used to What is used to produce goods and produce goods and services; the basic services; the basic resources include resources include land or natural land or natural resources, capital, resources, capital, labor or human labor or human resources, and resources, and entrepreneurship.entrepreneurship.

Page 8: Unit one, lesson one

Land or Natural ResourcesLand or Natural Resources

"Gifts of Nature" "Gifts of Nature" that can be used to that can be used to produce goods and produce goods and services; for services; for example water, example water, mineral deposits, mineral deposits, forests, and actual forests, and actual fields. Also referred fields. Also referred to as natural to as natural resources.resources.

Page 9: Unit one, lesson one

LaborLabor

The quantity and quality The quantity and quality (skills, knowledge, and (skills, knowledge, and physical health) of physical health) of human efforts available human efforts available to produce goods and to produce goods and services.services.

Page 10: Unit one, lesson one

CapitalCapital

Goods made and Goods made and used to produce used to produce other goods and other goods and services, ie services, ie buildings, tools, buildings, tools, and equipment.and equipment.

Page 11: Unit one, lesson one

EntrepreneurshipEntrepreneurship

Some economists classify Some economists classify entrepreneurship as the fourth factor entrepreneurship as the fourth factor of production.of production.

Ability of individuals to start new Ability of individuals to start new businesses, to introduce new businesses, to introduce new products and techniques, and to products and techniques, and to improve management techniquesimprove management techniques

Page 12: Unit one, lesson one

Intermediate GoodsIntermediate Goods

Goods used in the production of other Goods used in the production of other goodsgoods

For example, sheet steel used in the For example, sheet steel used in the manufacture of car bodies or construction; manufacture of car bodies or construction; cheese in a pizzeriacheese in a pizzeria

Intermediate goods are different from Intermediate goods are different from capital goods in that they cannot be used capital goods in that they cannot be used again. They are changed in the production again. They are changed in the production process.process.