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EconomicsChapter 1 Notes
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I. What is Economics?
A. The study of how a person, a society, a government…
1. Makes choices regarding its resources.
2. Allocates its resources because resources are scarce.
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II. What is scarcity?
A. Lack of resources
1. Not having enough of the resources
2. Having more than 1 valuable way to use the resources
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B. What causes scarcity?
1. Rapid increase of demand
2. Poor distribution
3. Personal perspective
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III. Wants and Needs
A. Resources are needed to fill our needs and wants.
B. Needs- what you have to survive.
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1. Basic needs a. food
b. clothing
c. shelter
Do we really have needs? Does choice play a role in this?
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C. Wants-Everything that you
desire.D. Wants are unlimited
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IV. Goods and Services
A. Two roles in economic society
1. Producers
2. Consumers
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B. Consumers
1. When you use products (goods) or services for yourself and not for resale.
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C. Producers
1. Someone who provides goods and/or services.
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D. Goods and Services
1. Goods: products consumers buy to satisfy wants
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2. Services: actions by producers to satisfy wants and needs
a. Teaching, painting, mechanic, plumber, etc.
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V. What are three types of resources?
All resources are LIMITED!!!
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Human Resources
• 1. Labor - workers
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B. Natural Resources 1. Land – lumber, oil, coal,
2. Products from the earth (renewable vs. nonrenewable)
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C. Capital Resources
1. Capital is money, machinery, or factories
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VI. What question must every society answer?
A. What will we make?
1. What products or services to be made depends on resources.
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B. How will we produce or make the products?
1. Use of technology, by hand?
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C. Who will get the goods?
1. Everyone or just a few?
2. Distribution
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D. Are we going to save any resources for the future?
1. reduce, reuse, recycle
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VII. How we deal with scarcity?A. Do without the item
B. Redistribute resources
C. Recycle
D. Create new resources
1. Example: Solar Power
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VIII. Opportunity Costs/Real Costs
A. Real Costs
1. Costs of the resources used to produce goods and services
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B. Opportunity Costs
1. Value of time, money, goods, and services given up in making choices.
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C. Trade-off
1. A choice between use of resources
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D. Economic Model
1. Used to understand economic problems and study trade offs
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E. Production Possibility Model
1. Only two goods produced2. Resources can be used to produce both
3. Trade off4. Economics is the study of the trade offs.