1. Fundamentals Summary (EOC1).pptx - SSEF1 u2605Explain...

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SSEF1: Explain why limited productive resources and unlimited wants result in scarcity, opportunity costs , and trade offs for individuals, businesses, and governments A. define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources .
Why do we study Economics ? Scarcity - There is not enough resources for everyone to have what they want. In order for a resource to be scarce it must: Be limited Be desirable Have multiple uses UNLIMITED WANTS and LIMITED RESOURCES = Scarcity So… we have to make choices...
Standard SSEF1.b. Define and give examples of productive resources (i.e. factors of production): natural resources (i.e. land), human resources (i.e. labor and human capital), physical capital and entrepreneurship.
Factors of Production: Natural Resources Land : All natural resources that are used to produce goods and services Ex: Wheat, soil, iron, ore, trees, water, animals
Factors of Production: Human Resources Labor : Any effort a person devotes to a task for which that person is paid Human Capital : Knowledge and experience a person brings with them to a job
Factors of Production: Physical Capital Physical Capital : Any human-made resource that is used to create other goods and services Ex: Tools (hammer), Factory (used to make products), Restaurant (used to make food)
Factors of Production: Entrepreneurship Entrepreneurship (on-tra-pra-new-er-ship): Ambitious leader who is motivated by profit to combines all other factors of production (land, labor, capital) to create their own business
SSEF1: Explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and trade offs for individuals, businesses, and governments STANDARD
Trade Offs and Opportunity Cost Trade Offs = Everything you give up when you make a decision Opportunity Cost = Best alternative given up
Standard SSEF2 The student will give examples of how rational decision making entails comparing the marginal benefits and the marginal costs of an action. a. Define marginal cost and marginal benefit. b. Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs. c. Explain that people, businesses, and governments respond to positive and negative incentives in predictable ways
Rational Decisions You make a rational decision when marginal benefits are greater than or equal to marginal costs In Economics, Marginal means additional Marginal benefit is the additional satisfaction someone gets from an action Marginal cost is the additional amount someone pays for something
Positive Incentive Positive Incentive = A reward that makes you want to do something Ex: Practicing everyday to win a tournament Ex: Studying to make an “A” on a test

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