Chapter 3 section 1 Householdthe most important economic
![Chapter 3 section 1 • Household-the most important economic decision maker, consisting of all Chapter 3 section 1 • Household-the most important economic decision maker, consisting of all](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-1.jpg)
![Households • Farmers-grow and kill their food. Sew clothing. Farms –fertilizer are need to Households • Farmers-grow and kill their food. Sew clothing. Farms –fertilizer are need to](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-2.jpg)
![Households • Less production occurs at home • More goods and services are purchased Households • Less production occurs at home • More goods and services are purchased](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-3.jpg)
![House holds maximizes utility • Households- are assumed to pursue their rational self-interest. (they House holds maximizes utility • Households- are assumed to pursue their rational self-interest. (they](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-4.jpg)
![Firms • A firms is an economic unit formed by a profit-seeking entrepreneur who Firms • A firms is an economic unit formed by a profit-seeking entrepreneur who](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-5.jpg)
![continued • Wool sweaters. Sheer sheep (cut the wool of the sheep). Clean and continued • Wool sweaters. Sheer sheep (cut the wool of the sheep). Clean and](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-6.jpg)
![continued • An entrepreneur by hiring specialist to make many sweater rather than just continued • An entrepreneur by hiring specialist to make many sweater rather than just](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-7.jpg)
![The Industrial Revolution • Technological developments, water power & steam power. • Shift in The Industrial Revolution • Technological developments, water power & steam power. • Shift in](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-8.jpg)
![continued • 4. ) facilitated the use of specialized machines far larger than anything continued • 4. ) facilitated the use of specialized machines far larger than anything](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-9.jpg)
- Slides: 9
![Chapter 3 section 1 Householdthe most important economic decision maker consisting of all Chapter 3 section 1 • Household-the most important economic decision maker, consisting of all](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-1.jpg)
Chapter 3 section 1 • Household-the most important economic decision maker, consisting of all those who live under one roof. • Demand goods and services, sellers of resources (ex. Resources). • Choices include what to buy, how much to save where to live, and where to work.
![Households Farmersgrow and kill their food Sew clothing Farms fertilizer are need to Households • Farmers-grow and kill their food. Sew clothing. Farms –fertilizer are need to](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-2.jpg)
Households • Farmers-grow and kill their food. Sew clothing. Farms –fertilizer are need to grown enough food. • Move away from agriculture to factory work. • Require growing large amounts of food for the public, or making large amount clothing and other tools for the households. • Households-now provide labor to make goods and services. • Before it was a one person income per household. • At least today, two incomes per household.
![Households Less production occurs at home More goods and services are purchased Households • Less production occurs at home • More goods and services are purchased](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-3.jpg)
Households • Less production occurs at home • More goods and services are purchased in markets. • Reduced household production has led to increase in need/use of child services. • Rise in two-earner families has reduced the significance of specialization within the household.
![House holds maximizes utility Households are assumed to pursue their rational selfinterest they House holds maximizes utility • Households- are assumed to pursue their rational self-interest. (they](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-4.jpg)
House holds maximizes utility • Households- are assumed to pursue their rational self-interest. (they try to act in their best interest by selecting products and services that are intended to make them better off. ) • Households try to maximize their utility. • Utility- their level of satisfaction or sense of wellbeing. • Depends personal goals, not some objective standard.
![Firms A firms is an economic unit formed by a profitseeking entrepreneur who Firms • A firms is an economic unit formed by a profit-seeking entrepreneur who](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-5.jpg)
Firms • A firms is an economic unit formed by a profit-seeking entrepreneur who combines resources to produce goods and services and accepts the risk of profit and loss. • Evolution of the Firm. • Specialization and comparative advantages (household that are no longer self sufficient)
![continued Wool sweaters Sheer sheep cut the wool of the sheep Clean and continued • Wool sweaters. Sheer sheep (cut the wool of the sheep). Clean and](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-6.jpg)
continued • Wool sweaters. Sheer sheep (cut the wool of the sheep). Clean and twist the wool into yarn. Yarn is knitted into a sweater. • Suppose you went to different people for each transaction. • Transaction cost-the cost of time and information required for exchange-could cancel out the efficiency gained from specialization. • Sale of the sweater.
![continued An entrepreneur by hiring specialist to make many sweater rather than just continued • An entrepreneur by hiring specialist to make many sweater rather than just](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-7.jpg)
continued • An entrepreneur by hiring specialist to make many sweater rather than just one, is able to reduce the transaction cost per sweater. • 17 th and 18 th century, homemade factories creating wool or cotton products were known as Cottage industries.
![The Industrial Revolution Technological developments water power steam power Shift in The Industrial Revolution • Technological developments, water power & steam power. • Shift in](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-8.jpg)
The Industrial Revolution • Technological developments, water power & steam power. • Shift in employment form rural farm to urban factory • Large organized factories • 1. ) promote more efficient division of labor • 2. ) allowed for the direct supervision of production • 3. ) reduced transportation cost
![continued 4 facilitated the use of specialized machines far larger than anything continued • 4. ) facilitated the use of specialized machines far larger than anything](https://slidetodoc.com/presentation_image/ad1ffa6b7ee420ec6e19b7d8bf2c2329/image-9.jpg)
continued • 4. ) facilitated the use of specialized machines far larger than anything that had been used in the home. • Industrial Revolution, Great Britain 1750 • Profit = Revenue – Cost of Production.
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Chapter 2 section 1 answering the three economic questions
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