Chapter 1: Life is Economics

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Chapter 1 Life is Economics
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What is Economics?

• Why should we study Economics?

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Section A Unlimited Wants and Limited Resources

• Scarcity
• Does scarcity affect all of the following?
• Consumers
• Businesses
• Government

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Section B Opportunity Costs

• Trade-Offs and Opportunity Costs
• Ted and his Girlfriend pg. 11
• What are Teds trade-offs and costs?
• His girlfriends?
• Is there an opportunity cost to not doing
  homework?

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Section C From Resources to Products.

• Production
• Resources
• Factors of Production
• Natural Resources
• Labor
• Capital
• Entrepreneurship

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Section D How Economists Use Models

• Model
• Based on assumptions
• Used to understand past, present and future.
• Often change
• Used by government and business

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Section E Making Rational Choices

• Rational Choice- Taking greater value over those
  with lesser values.
• Different opinions make it hard

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• Positive Statements
• Facts that can be proven
• Normative Statements
• Opinion
• Cannot be proven
• People can disagree

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Section F Production Possibilities Frontier

• Different combinations of two products that can
  be produced from a given quantity of the four
  factors of production.

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Crusoes Possibilities

• Make a table that lists all of crusoes possible
  choices.

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• Can Crusoe produce outside the PPF?
• What does it mean if he is producing inside the
  PPF?
• How could he move the PPF outward?