Opening Question

• What is the difference between WANT and NEED?

What you desire. What you’d like to have. MORE!

What’s required for survival.In Economics, “Needs” are no different than “Wants”

How available something is. Most things are scarce to some degree

Things that are freely available everywhere. e.g., Air

The study of the allocation of scarce resources in the presence of seemingly unlimited wants.

Things only have value if they are wanted. Value increases with desire and scarcity.

How satisfied you are. People will try to maximize utility – not necessarily just wealth.

There’s No Such Thing As A Free Lunch

Every decision has costs as well as benefits

Machinery or tools used in production

Workers in production

Property and inputs used in production

Coordinator of production

(RESOURCES)

Purchased by individuals for personal use

Purchased by business to produce more goodsTools; Machines

Goods that last several years (cars; appliances)

Goods that are consumed quickly (food; clothes)

Economic Systems

MarketAn arrangement where buyers and sellers exchange goods and services. Does not need to be a physical location.

Free MarketA market where exchange is voluntary. Buyers and sellers decide for themselves what and how much to buy or sell

Consumer SovereigntyIt is the demands of consumers that decide what and how much is produced