10/22/2014crc economics1. 10/22/2014crc economics2 what did we talk about last time? essential...

04/11/23 CRC Economics 1


What did we talk about last time?

Essential information Who Am I? Course Information Who Are You?


What do we study this time?

Chapter 1Ten Principles of Economics

Introduction: Basic Economic Concepts• Goods and services (G&S)• Resources• Society’s basic problem• Basic questions in Economics


Do you know …

what stuff that we want in life? what we need to produce stuff? how stuff are produced? a society’s basic problem and its

solution? the basic questions answered by

Economics?


1. What stuff do we want in life?

In life, we want stuff, that economists call collectivelygoods and services (G&S).


a. Goods Goods, or commodities, are tangible stuff,

including durable and non-durable goods.

Durable goodsUsed for more than 1 year

Non-durable goodsUsed for less than 1 year


b. Services Services are intangible stuff, such as …

Medical care Legal services Education

Music Sports Movies


2. What do we need to produce G&S?

a. Company founderor entrepreneur

(a resource)

b. Factories/toolsor physical capital

(a resource)

d. Worker skillsor human capital

(a resource)

f. Know-howor technology

e. Materialsor natural resources

c. Workers or labor

(a resource)

To produce a car, we need …


2. What do we need to produce G&S?

Resources (also calledinputs or factors of production)

a. Company founder Entrepreneur Ent

f. Know-how (Technology/Technological knowledge) A

c. Workers Labor L

d. Worker skills Human capital H

e. Materials Natural resources N

b. Factories / tools Physical capital K

Notation


a. Entrepreneurs (Ent) Risk takers who organize the production of G&S


b. Physical capital (K)

The stock of equipment and structures, e.g. factories, tools etc., used to produce G&S


c. Labor (L)

People’s efforts and time


d. Human capital (H) The knowledge and skills acquired through

education, training, and experience


e. Natural resources (N)

Inputs provided by nature, e.g. land, water, trees, oil, etc.


f. Technology / Technological Knowledge (A)

Society’s understanding of the best ways to produce G&S


3. How are G&S produced?

RReessoouurrcceess

OOuuttppuut t GG&&SS

TechnologTechnologyy

NN

LL

HH

KK

EntEnt

(Technologi(Technological cal

knowledge)knowledge)


4. What is a society’s basic problem and its solution? Do we want a lot of G&S? Do we have a lot of resources?

Our wants of G&S are unlimite

d.

Our resource

s are limited.

Society’s basic problem is scarcity,

(We cannot have everything that we want.)

Yes.

No.

i.e. the limited nature of society’s resources.


How do societies solve the scarcity problem?

By using the principles in Economics, which is the study of how society manages its scarce resources.

The economy is similar to a household. The word “Economy,” from

“oikonomos” (a Greek word), means “one who manages a household.”


4. What are the basic questions answered by Economics?

Economics try to answer the following questions:

• Who will work to produce G&S?• What goods/services and how many of

them will be produced?• What resources should be used in the

production of G&S?• At what prices should the goods/services

be sold?


Now you know …

what stuff that we want in life. what we need to produce stuff. how stuff are produced. the society’s basic problem and its

solution. the basic questions answered by

Economics.


What did you study this time?


Introduction: Basic Economic Concepts


What will you study next time?


How do people (as individuals) make decisions?

How do people interact? How does the economy as a whole

work?

10/22/2014crc economics1. 10/22/2014crc economics2 what did we talk about last time? essential...

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