Ch. 1
What is Economics?
Note guide
Want-Satisfaction Chain
Want
Resources needed
Method of production
Want-
Satisfaction
Method of distributions
Source of availability for consumption
Definitions
• ___________________ – a process that combines resources so the result is a good or service
• Distribution –
• Consumption – using a product or service
3 types of productive resources
• __________ – land, nature
• __________ – labor, physical and mental efforts
• __________ – building, tools, and machines
• All these together are the factors of production
• _____________________ – imagination, innovative thinking, and management skills needed to start and operate a business. This is the 4 th factor of production
Scarcity and Opportunity Cost
• Scarcity – an __________________ exists between wants and the resources available to satisfy them.

• Scarcity = _____________ > Available Resources
• __________________ ___________ – highest valued alternative given up as a result of making a choice.
The Economic Way of Thinking
• _____________ Forces People to Choose
• All Choices Involve Alternatives
Benefits or gains, as well as their costs or losses
*People Try to Make Good Choices
*People Respond to _______________
Positive rewards for making some kind of choice or behaving a certain way
Disincentive – fines of punishment
*People Gain when they Trade Voluntarily
__________ – exchanging something for something else
Choices are Future Oriented
Our Choices Are Influenced by the Choices of Others
Thinking at the Margin
• ______________ – the extra or additional costs or benefits of a decision
Choice-Making by Businesses
• The _____________ Motive
• _____________ = Total Sales > Total Costs
• The profit goal causes a business to try to pay the lowest prices for the resources it uses and to sell its products at the highest possible prices.
• Business people like to think at the margin.
Basic Economic Decisions
• __________________ Economy – relies of voluntary trades as the primary means of organizing and coordinating production.
• Market arrangement that allows buyers and sellers to make exchanges.
• ____________ Goods and Services to Produce?
• _________ Should Goods and Services Be Produced?
• For ____________ Will Goods and Services Be Produced?

Two Branches of Economics
• Macroeconomics –
• Microeconomics –