Introduction to Economics: Scarcity, Resources, and Economic Systems

What is economics?

The study of how people satisfy their needs and wants.

What are needs?

The things that a person has to have to survive.

What are examples of needs?

Food, water, shelter.

What are wants?

Those things that you would like, but do not need to survive.

What are examples of wants?

Car, iPad, concert tickets.

What is scarcity?

A limited amount of resources to meet unlimited wants and needs.

Why do we have scarcity?

We have unlimited wants and needs but limited resources.

What is the first cause of scarcity?

Personal perspective: your own feelings of what is needed or wanted.

What is the second cause of scarcity?

Poor distribution of resources.

What is the third cause of scarcity?

Rapid increase in demand.

What is one way to deal with scarcity?

Doing without something.

What is a second way to deal with scarcity?

Creating more resources.

What is a third way to deal with scarcity?

Making better use of our resources.

What are real costs?

All of the resources used to produce a good or service.

What are trade-offs?

When you choose between two possible uses for a resource, giving up one alternative for another.

What are opportunity costs?

The value of time, money, goods, and services given up in an economic choice.

What are the opportunity costs of going to college?

Costs a lot of money, student loans for years, no guarantee of a job.

What are goods?

Physical objects such as computers, shoes, and cars.

What are services?

Actions that a person performs for another person.

What are the four basic economic questions?

What goods and services will be produced? How will they be produced? Who are they for? How much will be produced now and later?

What are resources?

Materials from which goods and services are made.

What are the three types of resources?

Human resources, natural resources, capital.

What are human resources?

A person's knowledge, skills, attitudes, and abilities.

What are natural resources?

Raw materials from which goods and services are made.

What is capital?

Money and property used to produce goods and services.

What is an economic system?

The method used by a society to produce and distribute goods and services.

What are the six features of the American Free Market Economy?

Economic freedom, competition, private property, self-interest, voluntary exchange, profit motive.

What are the three features of the American Command Economy?

Government regulation of some business practices, limits on choices, government aid to the needy.

In a Free Market, who answers the basic economic questions?

Individuals answer the basic economic questions.

In a Command Economy, who answers the basic economic questions?

The government answers the basic economic questions.

In a Mixed Economy, who answers the basic economic questions?

The government and individuals both answer the basic economic questions.