What is Economics Economics n Study of how

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What is Economics?

What is Economics?

Economics n Study of how people seek to satisfy their needs and wants by

Economics n Study of how people seek to satisfy their needs and wants by making choices.

Dissecting the Definition n Needs: something like air, food, shelter that is necessary for

Dissecting the Definition n Needs: something like air, food, shelter that is necessary for survival n Wants: an item that we desire but that is not essential to survival

Additional Info/Vocabulary Terms n. Allocate to divide among or distribute in shares q

Additional Info/Vocabulary Terms n. Allocate to divide among or distribute in shares q

Additional Info/Vocabulary Terms n. Resources the means to accomplish something q

Additional Info/Vocabulary Terms n. Resources the means to accomplish something q

Activity n n In your groups, answer as many questions correctly as you can.

Activity n n In your groups, answer as many questions correctly as you can. Each correct answer gets bonus points for your team! Now, decide how you would allocate your bonus points between your group members q q q How many different ways could you allocate your resources? Which method did you choose and is it fair? Is every member of your group satisfied?

Econ’s No. 1 Problem… n Scarcity: q When there is not as much of

Econ’s No. 1 Problem… n Scarcity: q When there is not as much of a good or service as everyone wants. n Do you have as much money as you could possibly want? n When the new i. Pad/i. Phone hits the market, is it immediately available for everyone?

Microeconomics q Study of economic behavior & decision making of small units, such as

Microeconomics q Study of economic behavior & decision making of small units, such as individuals, families, & businesses Individual decision making is micro (small) q

Macroeconomics q Study of economic behavior & decision making of entire economies q. Examines

Macroeconomics q Study of economic behavior & decision making of entire economies q. Examines major trends for the economy as a whole q. Societal decision making is macro (large)

Three Basic Questions? ? ? n In economics there are 3 basic questions that

Three Basic Questions? ? ? n In economics there are 3 basic questions that every country must answer… What to produce? q How to produce? q For whom should we produce? q

Economic Systems n. A set of rules by which a nation answers the basic

Economic Systems n. A set of rules by which a nation answers the basic questions of what, how, and for whom.

Types of Economic Systems n Traditional n Command n Market n Mixed

Types of Economic Systems n Traditional n Command n Market n Mixed

Traditional n Decisions are based mostly on customs n Difficult to change n Mostly

Traditional n Decisions are based mostly on customs n Difficult to change n Mostly in underdeveloped countries/3 rd world countries n Example: Chad

Command n Government ownership & control of production n Government makes ALL decisions n

Command n Government ownership & control of production n Government makes ALL decisions n 2 main types Socialism & Communism n Example: North Korea

Market n Means of production are owned & controlled by private individuals or groups

Market n Means of production are owned & controlled by private individuals or groups n Government plays a small role n Market determines how resources are used n Cannot be found today