Chapter I Introduction to Economics

Chapter I Introduction to Economics - INTRODUCTION to...

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Chapter 1 Chapter 1 INTRODUCTION to ECONOMICS
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What is Economics? What is Economics? The word economy economy comes from a Greek word for “ one who manages a household .” is the study of how people and society organize scarce and limited resources to produce goods and services to satisfy unlimited human wants.
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What is Economics? What is Economics? Economics is the "study of how societies use scarce resources to produce valuable commodities and distribute them among different people." -- Paul A. Samuelson
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Mark’s story about Jesus feeding of five loaves and two fishes to the five thousand followers on the shore of the Sea of Galilee In the Bible:  The Multiplication of Loaves and Fishes
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What is a Resource? What is a Resource? Resources are things or services that are used to produce goods/services to satisfy human wants. They are free or economic . The test whether a resource is free or economic is Price - which is anything of value or cost. $ 50.00
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1. Economic Resources are scarce and limited. They command non-zero prices and are obtained with charges. 2. Free Resources are abundant which can be obtained without charges. Economics exists because there is scarcity…. For  without it there is no use/reason to study  economics! What is a Resource? What is a Resource?
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Classification of Economic  Classification of Economic  Resources Resources also called Factors of Production Factors of Production , these are inputs used in the production of output (goods and services) to satisfy human wants. 1. Land 2. Labor 3. Capital 4. Technology 5. Entrepreneurship
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Scarcity is a state where there are not enough nor can there ever be enough goods and services to satisfy wants and needs of people. Thus, it forces people to make choices/decisions that give rise to any alternatives/options and tradeoffs. Choice is a rational decision made after considering the benefits and costs of using resources. It is an alternative course of action or an option --- to do or not to do. Concepts of Economics Concepts of Economics    
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Tradeoff is a consequence of choice such as giving up one thing for something else. Concepts of Economics  Concepts of Economics  LA Laker basketball star Kobe  Bryant chose to skip college and  go straight from high school to  the pros where he has earned  millions of dollars.
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Concepts of Economics  Concepts of Economics  Human wants are things, services, goods, or circumstance that people desire. They vary over time and among people.
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Concepts of Economics  Concepts of Economics  Human needs are states of felt deprivation of basic satisfaction. People require/need food, clothing, shelter, safety,
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