Econ 1

Econ 1 - Chapter 1 Fundamental Economic Concepts SSEFl The...

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Chapter 1 Fundamental Economic Concepts SSEFl SSEF2 SSEF3 SSEF4 SSEF5 SSEF6 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and trade-offs for individuals, businesses, and governments. The student will give examples of how rational decision making entails comparing the marginal benefits and the marginal costs of an action. The student will explain how specialization and voluntary exchange between buyers and sellers increase the satisfaction of both parties. The student will compare and contrast different economic systems and explain how they answer the three basic economic questions of what to produce, how to produce; and for whom to produce. The student will describe the roles of government in a market economy. The student will explain how productivity, economic growth, and future standards of living are influenced by investment in factories, machinery, new technology, and the health, education, and training of people. 1.1 Resources and Wants Economics is the study of how individuals, businesses (sometimes referred to asfirms), and nations can best allocate their limited resources. In other words, how can people get the most benefit out of the limited resources available and at the lowest cost. Wants may be things people must have to live (food, shelter, clothing, etc.), or simply goods and services one desires and would obtain if he/she could. While wants might be unlimited, resources for obtaining them (i.e., money) are not. Therefore, people, businesses, and even governments have to make choices about how to spend their resources. This is why we study economics. Resources Resources are defined as those things which humans can put to productive use. Resources include money, people (particularly their labor), time, information, machines, and natural resources. Natural resources are all of the raw materials in nature used to produce what humans need or want (timber, water, iron ore, crude oil, natural gas, coal, fish, uranium, and arable [farmable] land). There are two kinds of natural resources: renewable and nonrenewable. A renewable natural resource is a resource that can be replenished (replaced) over time. A good example of a Natui il Resources
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Fundamental Economic Concepts renewable natural resource is timber. We cut trees down to make furniture, decks, baseball bats, paper, and so on. However, we can plant more trees and replenish the supply for future use. A ' nonrenewable natural resource, on the other hand, is a natural resource that cannot be replenished over time. An important example of a nonrenewable natural resource is petroleum (crude oil). It takes millions of years for petroleum to form, so there is a fixed supply of petroleum under the ground. When it is gone, there will be no more. It is important to remember that even renewable natural resources can be expended if they aren't given a chance to renew. Productive
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Econ 1 - Chapter 1 Fundamental Economic Concepts SSEFl The...

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