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3 3

Economics and You 4 Economics and You 4

Chapter Objectives 5 Chapter Objectives 5

Chapter Objectives 6 Chapter Objectives 6

Chapter Objectives 7 Chapter Objectives 7

Study Guide 9 Study Guide 9

10 10

11 11

Introduction 12 Introduction 12

The Fundamental Economic Problem 13 The Fundamental Economic Problem 13

14 14

Needs and Wants 15 Needs and Wants 15

“There Is No Such Thing as a Free Lunch” 16 “There Is No Such Thing as a Free Lunch” 16

Three Basic Questions 17 Three Basic Questions 17

18 18

WHAT to Produce 19 WHAT to Produce 19

HOW to Produce 20 HOW to Produce 20

FOR WHOM to Produce 21 FOR WHOM to Produce 21

The Factors of Production 22 The Factors of Production 22

23 23

Land 24 Land 24

Capital 25 Capital 25

Labor 26 Labor 26

Entrepreneurs 27 Entrepreneurs 27

Production 28 Production 28

The Scope of Economics 29 The Scope of Economics 29

Description 30 Description 30

Analysis 31 Analysis 31

Explanation 32 Explanation 32

Prediction 33 Prediction 33

Section Assessment 34 Section Assessment 34

35 35

36 36

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38 38

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40 40

Section Close 41 Section Close 41

Study Guide 43 Study Guide 43

44 44

45 45

Introduction 46 Introduction 46

Goods, Services, and Consumers 47 Goods, Services, and Consumers 47

Goods 48 Goods 48

Services 49 Services 49

Consumers 50 Consumers 50

Value, Utility, and Wealth 51 Value, Utility, and Wealth 51

Paradox of Value 52 Paradox of Value 52

Utility 53 Utility 53

Wealth 54 Wealth 54

The Circular Flow of Economic Activity 55 The Circular Flow of Economic Activity 55

Factor Markets 56 Factor Markets 56

Product Markets 57 Product Markets 57

58 58

Productivity and Economic Growth 59 Productivity and Economic Growth 59

Productivity 60 Productivity 60

Division of Labor and Specialization 61 Division of Labor and Specialization 61

Investing in Human Capital 62 Investing in Human Capital 62

Education pays. . . 63 Education pays. . . 63

64 64

Investing in the Future 65 Investing in the Future 65

Economic Interdependence 66 Economic Interdependence 66

Section Assessment 67 Section Assessment 67

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72 72

Section Close 73 Section Close 73

Study Guide 75 Study Guide 75

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77 77

Introduction 78 Introduction 78

Trade-Offs and Opportunity Cost 79 Trade-Offs and Opportunity Cost 79

Trade-Offs 80 Trade-Offs 80

81 81

Opportunity Cost 82 Opportunity Cost 82

Production Possibilities 83 Production Possibilities 83

Identifying Possible Alternatives 84 Identifying Possible Alternatives 84

85 85

Fully Employed Resources 86 Fully Employed Resources 86

87 87

Opportunity Cost 88 Opportunity Cost 88

The Cost of Idle Resources 89 The Cost of Idle Resources 89

90 90

Economic Growth 91 Economic Growth 91

92 92

Thinking Like an Economist 93 Thinking Like an Economist 93

Build Simple Models 94 Build Simple Models 94

95 95

Employ Cost-Benefit Analysis 96 Employ Cost-Benefit Analysis 96

Take Small, Incremental Steps 97 Take Small, Incremental Steps 97

The Road Ahead 98 The Road Ahead 98

Topics and Issues 99 Topics and Issues 99

100 100

Economics for Citizenship 101 Economics for Citizenship 101

Making the Rational Choice 102 Making the Rational Choice 102

Section Assessment 103 Section Assessment 103

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108 108

Section Close 109 Section Close 109

Section 1: Scarcity and the Science of Economics 111 Section 1: Scarcity and the Science of Economics 111

112 112

Section 2: Basic Economic Concepts 113 Section 2: Basic Economic Concepts 113

114 114

Section 3: Economic Choices and Decision Making 115 Section 3: Economic Choices and Decision Making 115

116 116

117 117

Identifying Key Terms 119 Identifying Key Terms 119

120 120

121 121

Reviewing the Facts 122 Reviewing the Facts 122

123 123

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129 129

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131 131

132 132

133 133

Thinking Critically 134 Thinking Critically 134

135 135

Applying Economic Skills 136 Applying Economic Skills 136

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139 139

The Role of the Entrepreneur The Role of the Entrepreneur

The Role of the Entrepreneur The Role of the Entrepreneur

The Role of the Entrepreneur The Role of the Entrepreneur

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