chapter 1: what is economics. goods vs. service goods: tangible service: professionals (intangible)
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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?
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