Warm-up

• List 5 things you need

• List 5 things you want

• How are the two lists different? Which ones can you live without?

Chapter 1What is Economics?

Section 1

Scarcity and the Factors of Production

Scarcity and Choice• The study of __________ begins

with the idea that people _________have everything they need and want.

• A ______is something like air, food, or shelter that is necessary for survival.

• A _______is an item that we desire but that is not essential to survival.

• Economics is the study of how people seek to ________ their needs and wants by making____________.

economicseconomics

cannotcannot

needneed

wantwant

satisfysatisfy

choiceschoices

Scarcity• ________are physical objects such

as shoes and shirts. Services are ______or _______that one person performs for another. Scarcity implies ________ quantities of resources to meet ________wants.

• No one can have an _________ supply of everything. Scarcity is not the same as a__________. A shortage occurs when producers _________ or _________ offer goods or services at the current prices. They can be temporary or____________.

GoodsGoods

actionsactions activitiesactivities

limitedlimitedunlimitedunlimited

endlessendless

shortageshortage

will notwill not cannotcannot

long-termlong-term

Factors of Production: Land, Labor and Capital

• Economists call the resources that are used to make all goods and services the ____________________. These include land, labor and capital.

L A N Da ll n a tu ra l re sou rces

L A B O Re ffo rt b y a pe rson fo r a ta sk

C A P IT A Lh u m a n -m a de reso urce th a t c rea tes

o the r go o ds an d se rvices

Factors o f P roduction

factors of productionfactors of production

Land, Labor, Capital

• Land refers to all ________ resources used to produce goods and services.

• Labor is the effort that a person devotes to a task for which that person is paid.

• Capital is any human-made resource that is used to produce other goods and services.

naturalnatural

Physical and Human Capital• Human-made objects

used to _________ other goods and services are called _________ capital. This saves companies a great deal of time and money.

• Human capital is the ___________ and skills a worker gains through education and experience.

createcreate

physicalphysical

knowledgeknowledge

LABOR…and the World

• **Economic development in ___________ countries, as in developed countries is linked to the factors of production. Many economists believe that the __________ impediment to economic growth in developing countries is the_________________. With poor _________ conditions and low _________ rates, the labor force does not have the ______ needed to keep up with modern technology.**

developingdeveloping

biggestbiggest

quality of laborquality of laborhealthhealth literacyliteracy

skillsskills

Entrepreneurs

• Entrepreneurs are ambitious leaders who decide how to ________ land, labor, and capital resources to create _____ goods and services.

combinecombine

newnew

Fill out the following…

• Which factors of production is represented:– An office building ___________________– And assembly line worker ____________– A tree used to make paper ____________– Unused soil ________________________– An artist ___________________________– A student __________________________

• Name 3 Entrepreneurs • 1. _______________ 2. ______________ 3. _______________

Andrew Carnegie• Andrew Carnegie, founder

of_______________, was an _____________who was instrumental in turning American steel manufacturing into a powerful industry. Between 1860-1900 steel became a key factor of economic development in the US. Carnegie utilized new manufacturing technologies such as the __________ ___________ and the open-hearth process.

Carnegie SteelCarnegie Steelentrepreneurentrepreneur

BessemerBessemerprocessprocess

• In 1901 Carnegie sold his company to___________, then retired and devoted himself to philanthropy

J.P. MorganJ.P. Morgan

Homework

• Binders & Syllabus are due next class• Because your time is scarce, you are constantly

facing trade-offs. Make a list of the trade-offs you have made in choosing how you used your time during a one-week period. What activities did you choose to do? What were the opportunity costs involved in your choices? You must have 3 per day (minimum). Chart format.

• There will be a quiz next class