Unit 1, Lesson 2

What Do Economists Study?

AOF Business Economics

Copyright © 2008–2012 National Academy Foundation. All rights reserved.

Economists study how decisions about resources are made

Economists study how people, businesses, and societies make decisions seeking to get the most out of their limited resources.

Can you name a resource that is not limited?

Resources are anything that helps achieve needs and wants

Resources are anything that households and firms need in order to achieve their needs and wants.

What resources do you use regularly?

Needs and wants always exceed available resources

Households and firms need to make choices because our needs and wants exceed the limited resources available.

Needs are for survival; wants are nice to have

Which of these are needs? Which are wants?

A need is a basic requirement for survival, such as:• Food • Clothing• Shelter

A want is simply something we would like to have but is not necessary for survival.

Consumers and producers are economic decision makers

There are two main groups of economic decision makers: consumers and producers.

You probably know you’re a consumer. Can you think of ways in which you’re a producer, too?

Needs and wants determine goods and services

Economists study how needs and wants determine the goods and services that are purchased.

Economics studies efficiencies

Economics is the study of how individuals, firms, and institutions convert limited resources into goods and services to satisfy our wants and needs.

Economists also study fiscal and monetary policies

Economists also study how governments regulate and participate in the economy through the laws they set, the purchases they make, and the actions they take.

Can you think of any fiscal policies that are “in the news”?