Professional Documents
Culture Documents
ECONOMICS
Choices, Choices, Choices, . . .
Part 1: The
Basics
WHAT IS ECONOMICS???
Economics – the study of how individuals
and societies make decisions about ways
to use scarce resources to fulfill wants and
needs.
What does THAT mean?!!??!!
The Study of Economics
Macroeconomics
– The big picture: growth,
employment, etc.
– Choices made by large
groups (like countries)
Microeconomics
– How do individuals make
economic decisions
ECONOMICS: 5 Economic
Questions
Society (we) must figure out
OPPORTUNITY COST =
If I buy a Then I
pizza… can’t afford
the
movies…
Land
Goods
Labor
Production/Manufacturing
“Factory” Consumers
Capital
Services
Entrepreneurship
Capital Goods and Consumer
Goods
Capital Goods: are
used to make other
goods
Consumer Goods:
final products that are
purchased directly by
the consumer
CHANGES IN PRODUCTION
Specialization –
dividing up production
so that Goods are
produced efficiently
Hardee’s makes
hamburgers, not
shoes!!
Division of Labor –
different people
perform different jobs
You do your job,
to achieve greater and I will do my
efficiency (assembly Job and we will
be more
line). EFFICIENT
CHANGES IN PRODUCTION
Consumption – how
much we buy
(Consumer
Sovereignty)
The DELL store is
empty because….
Everyone is at the
APPLE STORE!!!
CHANGES IN PRODUCTION
If we INCREASE land, labor, capital we
INCREASE production
– Many entrepreneurs invest profit back into production
GDP
The total peso value of ALL final Goods and
Services
produced in a country in a year.
(GROSS DOMESTIC PRODUCT)
World GDP
11 Korea,
Total GDPRep.
2005787,624
(millions
12 India
of US
785,468
dollars)
1 United
13 Mexico States
768,438
12,455,068
2 Japan
14 Russian
4,505,912
Federation 763,720
3 Germany
15 Australia2,781,900
700,672
4 China
16 Netherlands
2,228,862
594,755
5 United
17 Switzerland
Kingdom365,937
2,192,553
6 France
18 Belgium2,110,185
364,735a
7 Italy
19 Turkey
1,723,044
363,300
8 Spain
20 Sweden1,123,691
354,115
9 Canada
21 Saudi Arabia
1,115,192
309,778
10 Brazil 794,098
Part 2: Costs and Revenues
Costs and Revenues
Cost – the total
amount of money it
takes to produce an
item (to pay for ALL
Factors of
Production).
Costs and Revenues
Margin=Extra
Space
Costs and Revenues
Profit – the difference
between Total Costs
and Revenues. This
is WHY you’re in
BUSINESS (Profit
Motive!)
– Profit=Revenues-Total cost
For Example
WhiteCollar
Blue Collar
Manufacturing,
‘Office’ jobs work with hands
Usually control
the ‘labor’
production
in production
When Production Decreases
Downsizing – laying off employees to save costs.