Can We
Have It All?
Microeconomics Unit 1:
Basic Economic Concepts
Bell Ringer

Describe a time you had to make a difficult decision between
two or more options. Explain the situation, the next best
alternative, and how you made your decision.
An Economic Way of Thinking
Economics wouldn’t
existscarcity
were it not for
We have
unlimited
wants
And live in a
world with
Limited
resources
Scarcity is the
condition in which our
wants are greater
than the resources
available to satisfy
those wants
ECONOMICS!

Studies the choices people make while trying to
satisfy their unlimited wants in a world of limited
resources
How do we get the things we want?!



We produce them!
Using the FOUR FACTORS OF PRODUCTION!!!
What do we need to begin production?
 Michael
Scott explains: http://economicsoftheoffice.com/all/
The Four Factors of Production:
Land—all natural
resources used to
produce goods and
services
Labor—the effort that
a person devotes to a
task for which that
person is paid
Capital—any
human-made resource
that is used to produce
other goods and
services
Entrepreneur—
ambitious leaders who
decide how to combine
land, labor and capital
resources to create new
goods and services
Wants
are
unlimited
Resources
are
limited
Therefore,
People must
make
choices
Bell Ringer

Let’s review the four fabulous factors of production!
 List
each factor, describe and give an example
Consequences of Scarcity:
Opportunity cost:
Value of your next best
alternative you give up to do
something else.


Examples from BR?
Trade-off:

Get more of one thing only by
getting less of another.
Consequences of Scarcity:

Rationing Device:
 Way
to divide who gets what portion of
available goods and services.
 Price:

Most widely-used rationing device
Competition:
 People
try to get more of a rationing
device (i.e. cash monaaaay!) in order to
get more of what they want.
 For
us, that means competing for dollars.
Voluntary Exchange


Cornerstone of free enterprise (capitalism)
People have the right to make exchanges or trades that are in their
own best interests
 Examples?!
Production Possibilities Curve



Shows all possible
combinations of two goods an
economy can produce in a
certain period of time.
Because of scarcity, choices
must be made about how much
of which goods to produce.
https://www.youtube.com/wat
ch?v=83m0_pCky50
Economic Systems!

Three economic questions:
1.
2.
3.
What goods will be produced?
How will the goods be
produced?
For whom will the goods be
produced?
Major Economic Systems

Free enterprise
 Individuals
own resources and control the use of those resources
 Also called capitalism or market economy!

Socialism
 Government
controls and owns many of the resources
 Command economy is a specific type of socialism