Economics

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 Unit 1:
Basic Economic
Concepts

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Point of Emphasis:

Many key terms in an economics classroom are

used differently outside the classroom.

Examples include the words utility, marginal,

capital, demand, and investment.

It is important to distinguish between the way a

word may be used outside of economic context
and the way it is used in class.
I encourage you to think and SPEAK like an
economist in order to avoid this confusion. 3
 Big Question:
What is economics?

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 What is Economics?
• Economics is the science of scarcity.
• Scarcity- we have unlimited wants but
limited resources.
• Since we are unable to have everything
we desire, we must make choices on how
we will use our resources.
Economics is the study of choices
______ .
In economics we will study the choices of
individuals, firms, and governments.
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Examples:
You must choose between buying jeans or buying shoes.
Businesses must choose how many people to hire.
Governments must choose how much to spend on
welfare.

Textbook Definition
Economics- Social science concerned with the
efficient use of scarce resources to achieve
maximum satisfaction of economic wants.
(Study of how individuals and societies deal
scarcity
with ________).
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What does this quote have to do
with the idea of scarcity? 7
 Needs & Wants
What do I need to survive?
• Food & Water
• Shelter
• Clothing
• does it stop here?
What do you really need?
(discuss)

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 Needs & Wants
Every person has different wants and needs
So how do you determine what is truly a need or
just a really big want? (2 questions)
• Can I still function in life without this? and
keep up with my commitments?
• Will something bad happen if I don't have
this?
You may truly need a car to keep your job, but
what kind of car would work/ What can you
afford?
video https://www.youtube.com/watch?v=zW7k4Rvo1m8 9
Microeconomics vs.
Macroeconomics

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Macro or
Micro?

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Macro
or
Micro?

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 Macro or
Micro?

Copyright 13
ACDC Leadership 2021
 Micro vs. Macro
MICROeconomics-
Study of small economic units such as
individuals, firms, and markets.
Examples- Supply and demand in specific
industries, production costs, labor markets
MACROeconomics-
Study of the large economy as a whole or
economic aggregates.
Examples- economic growth, government
spending, inflation, unemployment,
international trade
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 How is Economics used?
•Economists use the scientific method to make
generalizations and abstractions to develop
theories. This is called theoretical economics.
•These theories are then applied to fix problems
or meet economic goals. This is called policy
economics.
Positive vs. Normative
Positive Statements- Based on facts. Avoids value
judgements (what is).
Normative Statements- Includes value judgements
(what ought to be).
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 Positive or Normative?
1. The rising price of crude oil on world markets will
lead to an increase in gas prices.
Positive
2. A rise in average temperatures will likely increase
the demand for sunscreen products.
Positive
3. Pollution is the most serious economic problem.
Normative
4. The government should ban smoking in public
places.
Normative
5. Unemployment is more harmful than inflation.
Normative 16
 Review with your partner…
1. Define scarcity
2. Define economics
3. Identify the relationship between scarcity and
choices
4. Define Needs & Wants. The key is choice
5. Explain how Macroeconomics is different than
Micro
6. Explain the difference between positive and
normative economics
7. Identify the four factors of production
8. Explain why entrepreneurs make goods/services

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