What is Economics?

Economics is….

• the study of how people make decisions in a world where resources are limited.

• it is also the study of how things are made, bought, sold and used.

2 Types of Economics

• Microeconomics:

“the small picture”.

(“micro” = small)

• decision making of individuals and individual businesses.

2 Types of Economics

• Macroeconomics:

“the big picture”.

(“macro” = big)

• decision making by large units such as governments or whole industries .

Let’s practice…

• Mr. and Mrs. Smith purchase a new T.V.

Microeconomics or Macroeconomics?

Microeconomics!

Let’s practice…

• The Federal Reserve cuts interest rates on loans.

Microeconomics or Macroeconmics?

Macroeconomics!

Let’s practice…

Best Buy slashes prices on all T.V.’s 48” and bigger.

Microeconomics or Macroeconomics?

Microeconomics!

Let’s practice…

• The airline industry asks the government for financial help.

Microeconomics or Macroeconomics?

Macroeconomics!

What is an economic model?

• An economic model is a theory that tries to explain human economic behavior.

Economic Systems…

• The way a country produces the things its people want and need is called an economic system.

• A country’s economic system determines how basic economic decisions will be made.

Any idea what the United States economic system is called?

• The United States economic system is called: Free Enterprise Capitalism

2 Major Economic Groups

• Producers: the individuals or groups that make or provide goods and services.

• Consumers: the individuals or groups that purchase and make use of the goods and services that are produced.

In this unit we will explore…

• In this unit we will explore:• Needs vs. Wants

• Scarcity• Economic Decision Making

• Factors of Production• Circular Flow of Economic Activity

• Factors that Promote Economic Growth• Capitalism: History and Features