What is Economics Chapters 1 3 Chapter 1

Chapter 1 -Section 1 • Scarcity and choice – Decisions btw. needs and wants

Sect. 1 cont…. • Factors of production – 1. Land – 2. Labor –

Section 2 • Opportunity Cost – The most desirable alternative given up as the

Section 3 • Production possibility curve – Shows efficiency, growth, and cost

Chapter 2 - Section 1 • 3 Economic questions – 1. What goods and

Sec. 1 cont… • Types of economic systems – Traditional – Market – Command

Section 2 • The Free Market – Why exists? • No one is self-sufficient

Sec. 2 cont… • Nature of the Marketplace – Self-interest – Competition – The

Section 3 • Centrally planned economies – Government controls factors of production • Socialism

Section 4 • Modern economies – Rise of mixed economies – Why?

Chapter 3 - Section 1 • Benefits of free enterprise – Property rights and

Section 2 • • • Providing Growth and Stability Macroeconomics Microeconomics Business Cycle Gross

Section 3 • Government provides public goods

Section 4 • Providing a Safety Net – Tax money used to help poor

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What is Economics? Chapters 1 -3

Chapter 1 -Section 1 • Scarcity and choice – Decisions btw. needs and wants and selecting goods and services • Economics is study of how people seek to satisfy their needs and wants by making choices • Scarcity implies limited quantities of resources to meet unlimited wants • Scarcity v. shortage

Sect. 1 cont…. • Factors of production – 1. Land – 2. Labor – 3. Capital (physical, human) – 4. Entrepreneurship

Section 2 • Opportunity Cost – The most desirable alternative given up as the result of a decision • Trade-offs • Use of decision-making grid – Cost benefit analysis

Section 3 • Production possibility curve – Shows efficiency, growth, and cost

Chapter 2 - Section 1 • 3 Economic questions – 1. What goods and services should be produced? – 2. How should goods and services be produced? – 3. Who consumes goods and services? • Economic goals and values – – – Economic efficiency Economic freedom Economic security and predictability Economic equity Economic growth and innovation

Sec. 1 cont… • Types of economic systems – Traditional – Market – Command – Mixed

Section 2 • The Free Market – Why exists? • No one is self-sufficient – Specialization – Buying and selling • Households v. Firms • Circular Flow Model of a Market Economy – Page 30

Sec. 2 cont… • Nature of the Marketplace – Self-interest – Competition – The Invisible Hand • Advantages of Free Market • Who is Adam Smith?

Section 3 • Centrally planned economies – Government controls factors of production • Socialism & Communism • Former Soviet Union – Collectives, Defense, Space, & Heavy industry – Life of consumers? – Problems • • 5 year plans Cannot meet needs of consumers Lack of incentive “Pretend to work in order to pretend to be paid”

Section 4 • Modern economies – Rise of mixed economies – Why?

Chapter 3 - Section 1 • Benefits of free enterprise – Property rights and taxation • Basic principles of Free Enterprise – Profit Motive – Open Opportunity – Economic rights • Private property, free contract, voluntary exchange • The role of Consumer and Government

Section 2 • • • Providing Growth and Stability Macroeconomics Microeconomics Business Cycle Gross Domestic Product (GDP) New Technologies

Section 3 • Government provides public goods

Section 4 • Providing a Safety Net – Tax money used to help poor • Redistribution programs – – Cash transfers In-kind benefits Medical benefits Education