CHAPTER 1: WHAT IS ECONOMICS

GOODS VS. SERVICE

GOODS: TangibleSERVICE: Professionals

(Intangible)

CONSUMER VS. PRODUCERS

YOU!! Businesses!!

WHAT IS A MARKET?

WHAT IS VOLUNTARY EXCHANGE?

FACTORS OF PRODUCTION

• NATURAL RESOURCES

• HUMAN RESOURCES

• CAPITAL RESOURCES

• ENTREPRENEURS

SCARCITY

• EVERYTHING IS SCARCE!!

OPPORTUNITY COSTS

• WHAT ARE YOU WILLING TO GIVE UP?• WHAT ARE YOU MISSING OUT ON?

OR

TRADE-OFF

• LET’S MAKE A DEAL! I WANT EVERYTHING!

AND

MARGINAL COSTS AND BENEFITS

• MARGINAL=ADDITIONAL

• LET’S GET A JOB IN MADISON—GAS $4.09

• LET’S GET A JOB IN BRANDON—GAS $4.09

PROFIT: HOW DO YOU GET IT?

• TOTAL REVENUE – TOTAL COST = PROFIT

• HOW MUCH MINUS HOW MUCHYOU MAKE YOU SPEND

QUESTIONS, WHAT QUESTIONS??

• THREE KEY ECONOMIC QUESTIONS: HOW WE RUN OUR ECONOMY!

• WHAT, HOW, WHO??

• WHAT GOODS/SERVICES SHOULD WE PRODUCE?• HOW ARE WE GOING TO PRODUCE

GOODS/SERVICES?• WHO WILL CONSUME THESE GOODS/SERVICES

TYPES OF ECONOMICS

• MICROECONOMICS: SINGLE INDIVIDUALS• HOW MUCH WILL YOU PAY FOR A TICKET?• DO WE TAKE A VACATION THIS YEAR?• SHOULD WE BUY A NEW IPAD?

• MACROECONOMICS: ECONOMY AS A WHOLE• “BIG PICTURE”• WHAT ARE TICKETS GOING FOR TODAY?• HOW MANY ARE UNEMPLOYED?• HOW HAS THE NATION’S TOTAL INCOME CHANGED?