SCARCITY Economics is the study of how people make choices to satisfy their wants For example: ...
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SCARCITY
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Economics is the study of how people make choices to satisfy their wants
For example: You must choose how to spend your time
Businesses must choose how many people to hire
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Scarcity occurs when there are limited quantities of resources to meet unlimited needs or desires
Shortages occur when producers will not or cannot offer goods or services at current prices
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LAND
LABOR
CAPITAL
ENTREPRENEURSHIP
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Land All natural resources that are used to produce goods and services.
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Labor Any effort a person devotes to a task for which that person is paid.
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Capital Any human-made resource that is used to create other goods and services.
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ENTREPRENEURSHIP- any ideas a human may have to improve or develop goods and services.
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Land
Popping Corn
Vegetable Oil
Labor
The human effort needed to pop the corn
Capital
Corn-PoppingDevice
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WHAT?HOW MANY?HOW? METHOD?FOR WHOM?
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COMMAND ECONOMYMARKET ECONOMYMIXED ECONOMY
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Does every decision you make involve trade-offs?
How can a decision-making grid help you identify the opportunity cost of a decision?
How will thinking at the margin affect decisions you make?
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Trade-offs are all the alternatives that we give up whenever we choose one course of action over others.
The most desirable alternative given up as a result of a decision is known as opportunity cost.
All individuals and groups of people make decisions that
involve trade-offs.
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• Economists encourage us to consider the benefits and costs of our decisions.
Benefits Enjoy more sleepHave more energy during the day
Better grade on testTeacher and parental approval
Personal satisfaction
Decision Sleep late Wake up early to study for testOpportunity
cost Extra study time Extra sleep time
Benefits forgone
Better grade on testTeacher and parental approvalPersonal satisfaction
Enjoy more sleepHave more energy during the day
Sleep late Wake up early to study
Alternatives
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When you decide how much more or less to do, you are thinking at the margin.Options
1st hour of extra study time
2nd hour of extra study time
3rd hour of extra study time
Benefit
Grade of C on test
Grade of B on test
Grade of B+ on test
Opportunity Cost
1 hour of sleep
2 hours ofsleep
3 hours of sleep
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MICROECONOMICSMACROECONOMICS
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Write 2-3 questions that will help you remember the material covered today.
Write 2-3 sentences in your own words describing what the lesson was about
Summary