Introduction to Economics

Welcome!

1) Take a Book (front of classroom)

2) Pick a desk carefully, it is for the entire semester!

ECONOMICS

The World & Resources People

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Why do we need Economics?

1) Resources are SCARCE

2) People have Unlimited Wants & Needs

FORCES:

3) Society to allocate resources

Formal Definition of Economics

• The social science of how society allocates scarce resources among unlimited wants and needs.

End of Day 1

The social sciences are academic disciplines which study the social life of human groups & individuals •including economics, geography, history, political science, psychology & sociology

• Economics is the social science of how a society allocates their scarce resources among unlimited wants and needs.

Air versus Oil

There is NO Free Lunch

• Nothing is ever free in Economics

• People face Trade-offs in all decision making

• Decisions have :– Opportunity Costs: what you give up

– Opportunity Benefits: what you gain

– Short Run and Long Run implications

Economic Decision MakingOpportunity Cost is the value of the next best alternative when you make a decision.

Make decisions where the opportunity benefit > opportunity cost

You decide totake 5 AP Classes

You put little effort into high school

Opportunity Cost Worksheet

Should I go to college?

Opportunity Benefit Opportunity Cost

Trade-off Analysis

Branches of Economics

• Microeconomics looks at individual parts of economy:– How households & firms make decisions and interact in

specific markets

• Macroeconomics looks at the entire economy:– Economy-wide phenomena including: inflation, unemployment,

interest rates & GDP (economic growth)

What is a Millenial?

Generation Y born between 1982-2000