Standard SSEF 1 a Define scarcity as a

Standard SSEF 1 a. – Define scarcity as a basic condition

Economic Way of Thinking Economics is the study of human behavior, and principles that have been developed to study this behavior.

Why do we study economics? Economics helps us learn how the world functions. It helps guide us through our decision making processes. Needs vs. Wants

Everything has a cost “There is No Such Thing as a Free Lunch” Every action has a cost

People Choose for Good Reasons People choose the alternative that benefits them the most.

Incentives Matter When incentives change, people’s behavior changes in predictable ways.

Systems to Influence Choices and Incentives Cooperation among people is governed by written and unwritten rules that are the core of an economic system

People Gain from Voluntary Trade People trade when they believe the trade makes them better off

Economics is Marginal Thinking Marginal Choices involve the effects of additions and subtractions from current conditions

The value of a Good or Service is affected by People’s Choices Goods and Services do not have intrinsic value; value is determined by preferences of buyers and sellers

Economic Actions Create Secondary Actions Good Economics Involves analyzing secondary effects Effe ct Caus e

The test of a Theory is its ability to Predict Correctly If theory predict the consequences of its actions, it is a good theory.

Scarcity Test for For something to be scarcity scarce, it must have two : things: 1. It must be desirable 2. It must have value (or a price)

A few good terms to know Good: an item that satisfies an economic want Service: A work performed for someone

A few good terms to know Consumer: A person who buys or uses goods to satisfy an need or want Producer: Someone who makes a product for others

Do YOU think like an Economist?

True or False? Because it is desirable, sunshine is scarce.

True or False? Because it is limited, polio is scarce.

True or False? Because water covers three -fourths of the earth’s surface and is renewable, it cannot be considered scarce.

True or False? The main cost of going to college is tuition, room and board.

True or False? If public transportation fares are raised, almost everyone will take trains anyway.

True or False? You get what you pay for.

True or False? If someone makes an economic gain, someone else loses.

True or False? If one nation produces everything better than another nation, there is not economic reason for these two nations to trade.

True or False? A non-regulated monopoly tends to charge the highest possible price.

True or False? A business owner’s decision to show more care for consumers is a decision to accept lower levels of profits.