Economics Thursday, January 30, 2014 Opening Question What is the difference between WANT and NEED?
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Transcript of Economics Thursday, January 30, 2014 Opening Question What is the difference between WANT and NEED?
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EconomicsThursday, January 30, 2014
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Opening Question
• What is the difference between WANT and NEED?
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What you desire. What you’d like to have. MORE!
What’s required for survival.In Economics, “Needs” are no different than “Wants”
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How available something is. Most things are scarce to some degree
Things that are freely available everywhere. e.g., Air
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The study of the allocation of scarce resources in the presence of seemingly unlimited wants.
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Things only have value if they are wanted. Value increases with desire and scarcity.
How satisfied you are. People will try to maximize utility – not necessarily just wealth.
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There’s No Such Thing As A Free Lunch
Every decision has costs as well as benefits
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Machinery or tools used in production
Workers in production
Property and inputs used in production
Coordinator of production
(RESOURCES)
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Purchased by individuals for personal use
Purchased by business to produce more goodsTools; Machines
Goods that last several years (cars; appliances)
Goods that are consumed quickly (food; clothes)
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$8 x 3 = $24 (you can subtract cost of food = $20.50)
= OC plus actual costs= $20.50 + $10 + $4.50= $35
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Economic SystemsMarketAn arrangement where buyers and sellers exchange goods and services. Does not need to be a physical location.
Free MarketA market where exchange is voluntary. Buyers and sellers decide for themselves what and how much to buy or sell
Consumer SovereigntyIt is the demands of consumers that decide what and how much is produced
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Goods Market
Factor Market
Businesses Consumers
Money
Goods
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