Economics, Scarcity, and Choice :: Economics

Economics, Scarcity, and ChoiceEconomics is the study of choice under conditions of scarcity Scarcity a situation in which the amount of something available is insufficient to satisfy the desire for it.- date and purchasing power are scarce As individuals, we face a scarcity of time and spending power. Given more of either, we could have more of the goods and services that we desire.Resources the land, labor, and capital that are used to father goods and services- scarce labor the time human beings spend producing goods and services capital long lasting tools used in producing goods and services physical capital buildings, machinery, equipment human capital skills and training workers be possessed of land the physical space on which production occurs, and the natural resources that come with it As a society, our resources, land, labor, and capital, are insufficient to produce all the goods and services we magnate desire. In other words, society faces a scarcity o f resources. Raw material not long lasting tool Ex. ChalkWhat to produce?How much to produce?How to produce it?The World of EconomicsMicroeconomics the study of the behavior of individual households, firms, and g everywherenments the Choices they make and their interaction in specific markets What happens to the cost of movie tickets over the next quintette years? How umteen jobs ordain open up in the fast-food industry?Macroeconomics the study of the economy as a whole Lumps all goods and services unitedly and looks at the economys total output.Positive economics the study of what is, of how the economy works (deals with the facts)Ex. If we lower income tax rates in the U.S. next year, will the economy grow faster? If so, by how much? What effect will it have on total employment?Normative economics the study of what should be it is used to make value judgments, identify Problems, and prescribe solutions. Normative analysis is based on positive analysis.Why Study Economics1. T o understand the area better- understand global and cataclysmic events such as wars, famines, epidemics- understand local problems ex. Worsening traffic conditions in the city- tell us how many skilled therapists, ministers are available to help us2. To gain self-confidence- when you master economics, you gain a sense of mastery over the world, and thus over your own life3. To achieve social change- make the world a better place