Fundamental Economic Concepts

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THREE BASIC QUESTIONS
• WHAT TO PRODUCE
• HOW TO PRODUCE
• FOR WHOM TO PRODUCE
• WHO ANSWERS THESE QUESTIONS???
FACTORS OF PRODUCTION
• LAND
• LABOR
• CAPITAL
• ENTREPRENEURS
THE SCOPE OF ECONOMICS
• WHY IS ECONOMICS A “SOCIAL SCIENCE”?
THE SCOPE OF ECONOMICS
• ECONOMICS DEALS WITH THE BEHAVIOR OF PEOPLE AS THEY STRUGGLE WITH THE FUNDAMENTAL
PROBLEM IN ECONOMICS: SCARCITY
• FOUR KEY ELEMENTS IN STUDYING ECON:
• DESCRIPTION
• ANALYSIS
• EXPLANATION
• PREDICTION
DESCRIPTION
• DESCRIBING ECONOMIC ACTIVITY
• GDP: DOLLAR VALUE OF ALL FINAL GOODS, SERVICES, AND STRUCTURES PRODUCED WITHIN A COUNTRY’S
BORDERS IN A 12-MONTH PERIOD. THIS IS THE MOST COMPREHENSIVE MEASURE OF A COUNTRY’S ECONOMIC
HEALTH
• OTHER DESCRIPTIONS: JOBS, PRICES, TRADE, TAXES, AND GOVERNMENT SPENDING
• WHY AND HOW QUESTIONS UNANSWERED
ANALYSIS
• WHY ARE YEEZY SHOES SO MUCH MORE EXPENSIVE THAN NIKES?
• ANSWERING THESE TYPES OF QUESTIONS HELPS US DISCOVER WHY
THINGS WORK AND HOW THINGS HAPPEN. THIS, IN TURN, WILL HELP US
DEAL WITH PROBLEMS WE’D LIKE TO SOLVE
EXPLANATION
• COMMUNICATING HOW AND WHY TO OTHERS
PREDICTION
• WILL INCOMES RISE OR FALL?
• ECONOMICS CAN HELP PREDICT THAT!
• THIS HELPS US BECOME MORE INFORMED CITIZENS AND BETTER DECISION MAKERS
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