European Economies
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Transcript of European Economies
Economics 101Economics 101
Unit 4 NotesUnit 4 Notes
What Does “Economics” Mean?
--Economics is the study of MONEY!
Needs & Wants
--We all must have a certain amount of food, water, clothing, & shelter to survive—NEEDS!
--Anything beyond these needs is a WANT
--Need: something required for survival; well defined & limited
--Want: something desired; endless
Opportunity Costs
--People have limited incomes; this forces us to make choices about how to spend our money
--Every choice has costs--Economists also count the
“choice” we didn’t make as the opportunity cost, or trade-off
--Opportunity Cost: the thing that is given up when something else is chosen
What Do We Spend $ On?
--How people spend their limited resources depends on their needs, likes and dislikes, income, available substitutes, and the price of goods they want
--Goods: any manufactured product, like food, shoes, TVs, etc.
What Does This Mean for Businesses?
--Like people, governments and businesses face limits and must make choices
--Businesses have limited profits, and countries have limited resources
--Resources include workers, money from taxes, natural resources, & machinery
--Because everyone faces limited resources, or scarcity, everyone makes choices--Scarcity: not enough resources, time, or money for all needs and wants
Economic Choices
INDIVIDUALS:--Some choices individuals make
include:--whether to save or spend their money--how to spend their money--how to divide their time between work and leisure
Economic ChoicesBUSINESSES:--Businesses have to decide what to
make, how much of it to make, how to make it, and what to do with their profits
--Profits: money earned beyond the cost of making and selling the product
--Profits can be taken as owner income, divided among workers, or invested in the business
--Invested: to commit money with the hope of making more money
Economic Choices
GOVERNMENTS Must Decide:--which natural resources to
preserve and which to sell--how much to tax--how to spend the nation’s
income--between spending on things
such as the military, education, roads, health services, etc.