Economics Questions l What is an economy

Economics

Questions l What is an economy?

l. A system of consuming and producing

l Who gets what and why? Why is there poverty?

l People must compete to get scarce resources. Some people lack ability, know-how, or resources of their own to compete

l What is the difference between a good and bad economy?

l. A good economy has a lot of producing and consuming which increases every year- a bad economy has decreasing amounts of producing and consuming year after year

l What are the differences between supply and demand?

l Supply has to do with businesses and producers, and demand has to do with consumers and buyers

l Can an economy be measured and predicted?

l Keeping track of the dollar amount of how much is produced every year

l How can an economy grow?

l We produce more next year than we did last year

l How are our lives affected by the economy?

l If there is less productivity, our standard of living may go down

l What happens when we try to influence the economy?

l We usually do not succeed. The economy is too big and too complex to be controlled.

l Why are some countries so poor?

l The wealth of a country is greatly linked to the resources it has in terms of natural or human.

What is the Economy? l During the Great Depressioneasy to say our economy has never been worse since the turn of the 20 th century (The Grapes of Wrath)

l One main symptom of our floundering economic state was a high rate of unemployment l Few jobs available for our labor force

l If only a few people are working, then that must mean that very little is being produced l Little production of goods and services

l Depressed level of buying and a low level of productioncondition lasted more than 10 years

l An Economy is a situation in which people produce goods and then other people consume those goods l Material goods are not the only things that people consume

l Services are actions or activities that are done for others l Ford and GM make cars for consumption by their customers. Lawyers and accountants provide services that customers need

l When the economy is in a slump, what do you think are some of the impacts on our society?

l Crime, poverty, less government revenue

l What is a definition for bad economy?

l Less is produced and consumed from year to year

Scarcity and Opportunity Cost l Fundamental problem of economics is Scarcity l People have unlimited desires and wants, but our resources are too limited to satisfy them

l Resulting condition leaves people with a multitude of difficult decisions l We all have wants and needs

l Needs include things like food and shelter l Necessary to our survival l Cars and fancy clothes may be wants that people have

l Wants are not vital to life, but we desire them just the same l Everyday, we must make decisions, based upon our resources, about how to satisfy our wants and needs

l Competition exists because of the scarcity of goods l Limited supply of resources that we desire l People may want many goods and services but there is never enough to go around

l If you decide to go buy a new Ipod, that may mean you will not have enough money for Prom- you have a limited amount of money available

l If you spend the money on one thing, it will not be available for another l This dilemma is fundamental to the study of economics

l Difficult choice between alternatives for our available resources will sometimes result in sacrifice

l Example: you have an opportunity to go to a baseball game and you want to gohowever, a new group that you really enjoy is giving a concert at the same time the game is scheduled

l You have the time and money to do only one of the two l You have a difficult choice to make l Have to weigh the options

l Your team may be in the playoffs, but you’ve never seen this band before l Opportunity cost of attending the game is not being able to attend the concert

l In the end, you have to figure out which one is more important l Losses and benefits of your decision are called trade-offs

l Go to the concert- it was a lot of fun, and you even made some new friends l You notice in the paper the next day that your team won in the last minutes of the game

l This may have been a rather tough sacrifice l Cost of what you sacrifice is called the opportunity cost

l Imagine you are in charge of a large corporation and you need to build some new factories. There will be numerous resources that must be allocated and many trade-offs will need to be considered

l Economists are consulted when large decisions like this are required

Questions: l A. If you decide to get a job right after high school that pays $22, 000 per year instead of going to college, what are some of the trade-offs and opportunity costs in the immediate future?

l B. What about the trade-offs and opportunity costs over long term?