Presentation Transcript

1. Fundamental Economic Concepts

   pp. 2-85
2. Remember: You are “valuable human capital” Things could not get done without your contribution Labor, skills, productivity Creativity, innovation, motivation Consumption, demand
3. Chapter 1 What is Economics? Section 1 p.5 Terms: Scarcity— 5 when society does not have enough resources to make things Affects production Affects price
4. Economics 6 the study of how people try to deal with the problem of seemingly unlimited and competing wants by careful management of scarce resources.
5. Need 6 what is required for survival Food Water Clothing Shelter
6. Want 6 an expression of a need. Usually beyond a basic form of a need One needs water One wants a cola drink (made with water and other ingredients)
7. Factors of production 7 resources required for the making of goods or performance of services. Land Capital Labor Entrepreneurs
8. Land 7 actual terrain owned, All the “gifts of nature” (natural resources) the land contains. Deserts Coasts Fertile fields Forests Mineral deposits, livestock Sunshine climate
9. Capital 7 used to produce goods and services. tools, equipment, machinery, factories, other non-monetary wealth
10. Financial capital 7 Money used to buy the capital.
11. Labor 8 People and their efforts, abilities, skills, who make goods and perform services. Usually attained through an ancient tradition, a job interview, CV = British slang for “curricula vitae” = resume.
12. Entrepreneur 8 a person who starts a business. Takes risk Finding enough financial capital to produce the good or service. Has new ideas for existing resources.
13. Production 8 the process of creating goods and services. Needs: Land Capital Labor entrepreneurs
14. Gross Domestic Product (GDP) 9 the dollar value of all final goods and services. Measures: A 12-month period Output of an entire nation Unemployment Inflation International trade Interaction between business and labor Effects of government spending and taxes
15. Section 2 p. 12, termsBasic Economic Concepts Economic product 12 goods and services that are Useful Scarce Transferable
16. Good 12 An item, physical, that is economically useful Satisfies a want Consumer good 12 item intended for final use by individuals Capital good 12 item used by manufacturers to produce other goods or services
17. mobile phone Dodger ball cap Cement truck Boeing 772 Doritos Tommy’s Triple Cheeseburger Chocolate candy wrapping machine Eye liner Caterpillar bulldozer Consumer good Consumer good Capital good Capital good Consumer good Consumer good Capital good Consumer good Capital good Consumer good or capital good? Mostly…..
18. Service 13 work that is performed for someone by someone else. Haircuts Home repairs Entertainment Professional sport Banking/finance Insurance sales
19. Value 13 the worth of a good and service that can be expressed in currency. US: dollars and cents Paradox of value 13 Some necessities have little monetary value Water Air
20. Utility 13 something is useful Provides satisfaction
21. Wealth 14 economic idea includes: Accumulation of products that are Tangible Useful Scarce Transferable to others
22. EC: Wealth includes (13) Natural resources Land Factories Stores Houses Motels/hotels Theaters Furniture Clothing Books Highways Video products Sports items Etc.
23. Market 14 A location or mechanism that allows buyers and sellers to exchange a certain economic product. Locations: (3) Local National Global Mechanism: Grouping (4) Age Ethnicity Interest Region
24. Factor market 14 where capital goods are bought and sold Includes job market Productive resources Product market 14 where consumer goods are bought and sold Money made through labor returns to businesses in purchases
25. Economic growth 15 the increased “circular flow” of factors of production Goods Services Payments Productivity 15 the measure of the amount of output created by the amount of inputs in a specific period of time. Increased productivity = same input makes more output
26. Division of labor 12 work is arranged so workers do fewer tasks than before Workers with less tasks tend to be more proficient. Specialization 12 a factor of production can do a task better than most other factors of production. Usually performing what they are best at.
27. Human capital 12 the sum of all the skills, abilities, health, and motivation of a person Government can develop it by Public education Business can invest by Training and job programs Individuals can invest by Education/training
28. Economic interdependence 17 one economic system depends on another economic system Nation to nation
29. Hwk Assessments, Class Work, to Know
30. Sect 1 Assessments: Checking for Understanding 1. Choices must be made as long as wants are greater than the resources available 3. Scarcity
31. Assessments 4. What to produce? How to produce? For whom to produce?
32. Assessments 5. The factors of production are Land, terrain and its natural resources Capital, Tools, building, money Labor People’s efforts to produce Entrepreneurs Start new business, find money/resources to produce
33. Assessments 6 Description Analysis Explanation prediction
34. Sect 2 Assessments: Checking for Understanding 1 Buying/selling goods and services Using money from sales to produce more goods. 3 Should reflect understanding interrelationships
35. Assessments 4 Should reflect diagram, p. 15 5 When productivity goes up, more output is produced with the same amount of inputs in the same amount of time
36. Assessments 6 Without specialized workers and goods, productivity would be reduced.
37. Why is prediction an important element of economics? People and society often need to know how their decisions will affect the well-being of people and businesses Especially in the future. Prediction enables people to evaluate the consequences of different choices.
38. Images, p. 14 Question Because they are “tangible”, scarce, useful, transferable to others.
39. Images, p 15 Question “you” Give Labor and get income Spend your income to buy Goods services
40. Why are you “valuable human capital”? Things could not get done without your contribution Labor, skills, productivity Creativity, innovation, motivation Consumption, demand
41. Adam Smith What factor of production would Adam Smith be most likely to identify as the source of a nation's wealth? Do you concur? Explain. Answer In TheWealth of Nations, Adam Smith argued the abilities and skills of a nation are its sources of wealth. he would likely identify labor or entrepreneurship rather than land or capital as the most important factor of production.
42. How is it possible for a good to be both a capital good and a consumer good? Some goods are used both by consumers and by companies to produce more goods. An example of this might be a small tractor. Used in a home garden, it is a consumer good, Used on a small farm it is a capital good. Do not use tractor example on any exam if asked.