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Transcript of Chapter 1
![Page 1: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/1.jpg)
Chapter 1
What is Economics?
![Page 2: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/2.jpg)
Everything has a price!!
![Page 3: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/3.jpg)
TINSTAAFL
• There Is No Such Thing As A Free Lunch!!!!!!!!
• The more a business gives away for free, the more it has to charge for the items it produces and sells.
![Page 4: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/4.jpg)
Group Activity
• Think of four specific items that companies claim are “free”.
• Then discuss how and by whom that item is paid for.
![Page 5: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/5.jpg)
Scarcity
• The condition that arises because society does not have enough resources to produce all of the things that people would like to have.
![Page 6: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/6.jpg)
Scarcity will always be…
• Why?
![Page 7: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/7.jpg)
Scarcity
• Not caused by shortage of money!• Caused by a lack of resources!
![Page 8: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/8.jpg)
Factors of Production
![Page 9: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/9.jpg)
Land
• In economics, land= “gifts of nature”
![Page 10: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/10.jpg)
Capital
• The tools, equipment, and factories used to make goods.
![Page 11: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/11.jpg)
Labor
• The workforce that uses efforts, abilities, and skills to produce goods.
![Page 12: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/12.jpg)
Entrepreneurs
• Risk takers who start businesses to earn a profit.
![Page 13: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/13.jpg)
Three Basic Questions
• To provide for the basic need of people, societies must answer three questions:
![Page 14: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/14.jpg)
What to Produce?
• Since societies cannot have everything they want, they must decide what to produce.
![Page 15: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/15.jpg)
How to Produce?
•What methods can be used to produce goods?
![Page 16: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/16.jpg)
For Whom to Produce?
•Societies must decide how goods are distributed.
![Page 17: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/17.jpg)
The Meaning and Scope of Economics
• Economics is the study of human efforts to satisfy what appears to be unlimited and competing wants through the careful use of relatively scarce resources.
![Page 18: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/18.jpg)
Trade-Offs
• People must make decisions on what products to buy because they cannot buy everything.
• When people cannot have everything they want, they face trade-offs.
![Page 19: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/19.jpg)
Opportunity Costs
•The “cost” of the next best alternative use of money, time, or resources when one choice is made over another.
![Page 20: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/20.jpg)
Incentives
• Positive rewards for making some kind of choice or behaving in a certain way
• When making choices, people respond to incentives
![Page 21: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/21.jpg)
The Profit Motive
• A major goal—or incentive—for a business is the profit motive
• Profit = total sales > total costs• Ensuring profit =making choices!!
![Page 22: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/22.jpg)
Production Possibility Curve
![Page 23: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/23.jpg)
Making a PPF
GUNS(millions of pounds)
BUTTER(millions of pounds)
0 15
9 14
12 12
14 9
15 0
![Page 24: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/24.jpg)
Macroeconomics
•The study of the economy as a whole (inflation, unemployment, long-term economic growth, gov’t involvement…)
![Page 25: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/25.jpg)
Microeconomics
•The study of individual consumers and businesses.
![Page 26: Chapter 1](https://reader036.fdocuments.in/reader036/viewer/2022070400/568134ca550346895d9bf47f/html5/thumbnails/26.jpg)
Ch 1 Notes Quiz
PROPERTIES
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