what is economics? t he study of individual choices concerning the use of resources among competing...
TRANSCRIPT
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What is Economics?
THE STUDY OF INDIVIDUAL CHOICES CONCERNING
THE USE OF RESOURCES AMONG COMPETING GOALS
GETTING THE BEST AND THE MOST FROM SCARCE
RESOURCES
HOW BEST TO ACHIEVE YOUR GOALS
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Wealth
• The subjective evaluation of well being? How YOU doin’?
• Economics is about much more than money.
• Finance is a branch of economics; economics is not finance.
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Vocabulary• Goal – something that a person wants to have or do• Resource – something that can be used to achieve
goals• Human capital – skills, knowledge, experience,
personal qualities• Natural resources – resources that are present without
human help, also called “land” • Physical capital – goods that have been produced to
produce other goods and services • Entrepreneur – a person who organizes productive
resources, takes risks, and finds new ways of combining resources to produce a product
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Short term goals
• Do something fun after school
• Do something fun this weekend
• Learn to play a new game
• Learn a new skill
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Long Term Goals
• College
• Want do you want to be when you grow up?
• What kind of house do you want when you grow up?
• How many children do you want?
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Social Goals
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Resources – inputs in production, things that can help us achieve our goals
• Natural Resources, also called Land
• Physical Capital
• Human Capital
• Entrepreneur
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Land – Natural Resources
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Physical Capital
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Economics vs. Finance
• Money is not a resource.
• Economics is about resources.
• Finance is about money.
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Bad News: Scarcity• Our resources are insufficient to
achieve all of our goals or to satisfy all of our wants.
• We can’t have everything we want.
• Wants/goals, not needs
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Good News: Economics
• Using economic reasoning, we can get more from the resources, like pulling rabbits out of a hat.
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Scarcity and Economics
• Scarcity (the bad news): we can’t do or have everything we want; there
aren’t enough resources.
• Economics (the good news): we
can get the most from the resources we
do have.
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Economics is about using resources to achieve goals
• What college to attend
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Economics is about using resources to achieve goals
• Work or not
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Economics is about using resources to achieve goals
• Who to date
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Economics is about using resources to achieve goals
• Poverty
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Economics is about using resources to achieve goals
• Environment
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Economics is about using resources to achieve goals
• Endangered species
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Economics is about using resources to achieve goals
• Drug abuse
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Economics is about using resources to achieve goals
• Education
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04/19/23 Lesson 1: Scarcity 24
Individual Goals: What We Want
• Health
• Friends and Family
• Career
• Peace
• Love
• Stuff
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04/19/23 Lesson 1: Scarcity 25
Social Goals: What We Want
1. More and better education
2. A cleaner environment
3. More and better health care
4. Greater public safety
5. Less stress
6. Preservation of non-renewable resources including natural resources
7. Elimination of poverty
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Here’s the Deal
• Resources are insufficient to reach all of our goals.
• “We can’t have everything we want.• We make choices.• Choices have costs.• So we should be careful about the choices
we make. • The question is always, “What is the best
use of our resources?”
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Three Questions Every Economist Will Ask
• Is this choice the best use of our resources?
• Will this choice achieve the goal?
• What are the likely unintended consequences of this choice?
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Economics
• The problem – scarcity
• The goal – maximize individual and
societal wealth
• The method –-- economic reasoning ---
how best to achieve our goals