Economics Powerpoint plus my notes :)
ECONOMICS:
5 Basic Concepts:
1. Social Science
2. Scarcity
3. Allocation
4. Limited Resources
5. Unlimited Needs and Wants
What makes it SOCIAL?
- Human relationships and behavior
- Social trends
- Theories/laws to explain events
- Predictions/possible actions
What makes it a SCIENCE?
- Uses the scientific method
- Uses mathematics
SCARCITY: The Economic Problem
When is a good or a service SCARCE?
“If a good or a service is limited and yet it is not needed or wanted, can you consider this good scarce?”
- It is a product of the conflict between limited resources and man’s unlimited wants and needs.
==> Must satisfy both conditions
3 Processes:
1. Production
Questions to ask:
a. What to produce? ==> What do people need? What is in demand?
b. How much to produce? ==> Quantity
c. How to produce?
Production Processes:
a. Capital Intensive – use more machines
b. Labor Intensive – use more workers
2. Distribution
Questions to ask:
a. How to divide the goods and services to society? ==> Equity? Equally?
b. How to allocate for present and future satisfaction? ==> Present and future needs
c. By how much do we pay those who own the productive resources? ==> Compensation for business and work, profit – not necessarily a bad thing
3. Consumption
Questions to ask:
a. What to buy?
b. How much to buy? ==> Quantity
c. At what price am I willing to buy? ==> Varies for each person
Allocation
- The solution to the problem of scarcity
- Term that is similar to budgeting
What’s the difference between EQUAL and EQUITABLE?
- EQUAL – same amount, regardless of effort
- EQUITABLE – get what is due you (effort)
LIMITED RESOURCES
Factors of Production:
1. Land ==> place, where we are
2. Labor ==> ability of a person to work
3. Capital ==> Economic perspective: any man-made good used to produce other goods and resources
4. Entrepreneurship ==> ability of a person to start and manage a business
UNLIMITED WANTS AND NEEDS
Using the five concepts, we can therefore define economics as:
“A social science that deals with the allocation of scarce resources to satisfy man’s unlimited needs and wants”
To simplify:
“Economics is basically trying to figure out how one makes sure that amidst the infinite cravings of people and the finite state of our resources, everyone is still happy.”
Food for the Hypothalamus:
- Is the same process applicable to people?
- Will judgments, stereotyping and fears diminish if we make an effort to get to know people?
- What are the benefits of trying to know the nature of another person?
- What’s stopping YOU?
