Excerpt From this Document
Introduction to Economics
Scarcity: the fundamental economic problem
- Arises because society does not have enough resources to produce all the things people would like to have
- And so? Why does this affect you?
How and when do you deal with scarcity?
- iPod example
- Hybrid cars?
What is economics?
- By definition: the study of choices that people make to satisfy their needs and wants
- Microeconomics: SMALL participants (businesses, people, individual markets)
- Macroeconomics: LARGE participants (governments, countries)
A Problem with Economics
“A careful study of economics usually reveals that the best time to buy anything is last year.” -- Unknown
- This quote addresses a very important fault of the study of economics. What is this problem? Why does this problem exist?
- There’s no such thing as a free lunch
- What’s the COST??
- Cost is not always just $$
- Don’t say the “F” word in economics!
- Definition: Alternative choices when spending their income or time.
- Think of 5 trade-offs for going to the movies on Saturday night.
- Definition: next best (only one) alternative use of money, time, or resources when one choice is made rather than another.
Difference Between Trade-Offs & Opportunity Costs
- Trade-Offs: The list of choices you had.
- Opportunity Costs: The next best choice you COULD HAVE chosen, BUT DIDN’T
Guns & Butter
- The classic example used to illustrate opportunity costs along the production possibilities frontier.
About this Document
An introductory lecture for a high-school economics class. Covers scarcity, trade-offs, and opportunity costs.