Chapter 1 Lesson 1 Scarcity & the science of Economics

1. Chapter 1 Lesson 1 Scarcity & the science of Economics

2. Economics: study of how people try to satisfy unlimited wants with limited resources. **#1 rule of economics: TINSTAAFL There Is No Such Thing As A Free Lunch

3. **Major econ. Problem: SCARCITY --occurs when people do not have enough resources to produce all of their needs & wants --does not occur because of lack of $ --ie=heart transplant

4. **4 Factors of Production 1. land Must be natural & limited

5. 2. capital Must be used for production

6. 3. labor The work force (human capital)

7. 4. Entrepreneurs Risk takers in search of a new business

8. Mark Cuban Broadcast.com Phil Knight Nike Pierre Omidyar Ebay Evan Spiegel & Bobby Murphy Snapchat Mark Zuckerburg Facebook Warren Buffett--Berkshire Hathaway Sean Combs Bad Boy Records

9. Economic Products: goods & services that are useful, relatively scarce & transferable 4 types of Goods: • Consumer 2. Capital 3. Durable (> 3 years) 4. Nondurable (< 3 years) Service: work performed for someone else

10. **The Three Basic Questions: • What to produce? 2. How to produce it? • For whom is the product being produced?

11. Product Partner Project!Improve or come up with a new product! • Name it • Draw the new product • Answer the three questions • what –be very descriptive and include the • type of good it is • how—how is the product going to be • made (factory, by hand, by you, by • hired workers) • for whom—who is your target consumer • **product must be school appropriate!

12. Product Partner Project!Improve or come up with a new product! 4. List and label the four factors of production (this should be the longest part of the project— be detailed! List your names as the Entrepreneurs) 5. What price would you sell it? **product must be school appropriate!

13. Economic Products musthave: 1. Value: worth expressed in dollars & cents **Paradox of Value: some necessities have little value whereas some non-necessities have higher value --think of it as the “diamond- water” paradox --Why? Scarcity!

14. 2. Utility: capacity to be useful & providesatisfaction --differs from one person to the next

15. Wealth: accumulation of those products that are tangible, scarce, useful and transferable --service is not included in wealth (talent cannot be transferred)