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Economic Terms for Lesson One

Choices labor macroeconomics

Management unlimited wants consumers

Economics job description land division of labor

Producers services scarce resources

Factors of production needs economic application tool

Social scientists capital secondary effect

Goods

Welcome to Economics! You are about to embark on a journey of learning that will provide you a totally new and different view of the world in which you live. You will begin to see yourself as an active decision maker in the American economy, making numerous choices as a producer and consumer of goods and services.

These economic choices help satisfy your wants and needs affecting the quality of your life style in the present and future. In addition, you will be asked to analyze historic events and observe human behavior in the modern world from the viewpoint of a social scientist. In other words you are about to become an American economist!

I know you have questions.

1. What is economics anyway?

2. What exactly does an economist do?

3. By the way, what is a social scientist?

Stay tuned during the rest of these lessons for the answers to these and many more economic questions.

Don't worry, you will be provided guidance and assistance, including numerous ECONOMIC APPLICATION TOOLS, as you begin your quest for economic knowledge. Many ECONOMIC APPLICATION TOOLS will be identified throughout all of the lessons. Watch for the red worker!

You will also be asked to write down some answers or make observations concerning an economic problem or question.

The symbol listed to the right will be your signal that it is time for a writing assignment.

Please don't miss the valuable information contained in the graphics. You can look at this information by clicking once on the graphic to enlarge the picture and once more to shrink it to its original size.

Some of the answers to the test questions will be taken from the information in the graphics.

An ECONOMIC APPLICATION TOOL may be an economic theory, law or definition that you can apply to an economic problem you are trying to analyze, or a question you are trying to answer.

Hang these ECONOMICS APPLICATION TOOLS in your economics workshop where they will be available when you need them.

Here are your first two ECONOMIC APPLICATION TOOLS that you will need to be a successful economist: wants and needs.

We all want and need many things. Some things such as food, clothing, and shelter are necessary for survival. These things are needs, because they are essential items that we need to help us stay alive.

Desirable things and luxuries such as cars, color televisions and dishwashers are called wants. These are not essential to life, but they make life more comfortable.

People's needs and wants are never satisfied, because as one need or want is fulfilled, another comes along to take its place.

We have identified two new ECONOMIC APPLICATION TOOLS, needs and wants.

Let's answer the first question that was raised earlier in the lesson.

1. What is economics?

2. What exactly does an economist do?

3. By the way, what is a social scientist?

Please watch for the following terms listed in the economic definitions: producers, consumers, scarce or limited resources, goods and services, choosing or choice.

They will become more ECONOMIC APPLICATION TOOLS.

What is economics?

1. Economics is about conserving scarce resources while producing more goods for people to consume. Economics is about choosing the scarce resources we need to use or conserve. Point to Ponder (Should we cut down the rain forest for farm land?)
2. Economics is the study of how the goods and services we want get produced, and how they are distributed among us. Point to Ponder (Name some goods and services you want produced.)
3. Economics is the study of how human beings go about the business of organizing their consumption and production activities. Point to Ponder (You are a consumer in our economy; name some things that you consume.)
4. 4. Economics is the study of how people, their governments and society end up choosing, with or without money, to employ scarce productive resources, to produce commodities and distribute them for consumption. Point to Ponder (Should the federal government spend more money on the repair of bridges or medical research?)
5. Economics is a social science concerned chiefly with the way society chooses to employ its limited resources, which have alternative uses, to produce goods and services for present and future consumption. Point to Ponder (Should we allow more offshore oil rigs because we need the oil or should we be more concerned with the environment?)

Simply stated, economics is about how people, through their governments cultures and societies, try to answer three basic economic questions:

(1) What should be produced?

(2) How should products be produced?

(3) For whom should these products be produced?

These same questions have been asked by societies throughout history.

This is your first of many chances to make the same type of decisions or choices that an economist would have to make. We will also be seeking your advice on some economic questions or problems throughout all of the economic lessons.

Remember, it will be your turn to make the decisions or give the advice when you see the

Take the Wheel

You are a member of the United States Senate Finance Committee. Please consider the following question now before the Finance Committee:

Should America increase computer spending for education to upgrade technology in our schools or upgrade weapons technology by purchasing new fighter jets for the U.S. Navy?

Think about some questions you might ask before you make your decision.

Real Life Economics 101

Please consider the following personal economics questions: When you go shopping, you assume the role of a consumer who is seeking to purchase goods and services from different types of businesses. What are examples of stores that offer only goods to customers, stores that offer only services, and stores that offers both goods and services?

Let's identify two more ECONOMIC APPLICATION TOOLS that will help you answer these questions.

The first ECONOMIC APPLICATION TOOL

is the definition of a consumer good; a tangible good (something you can touch, pick up carry). A consumer good is an economic product such as a candy bar, automobile, etc., that will satisfy a human want or need.

The second ECONOMIC APPLICATION TOOL is a consumer service; any intangible economic activities (counseling, catering, a bank teller cashing your pay check, etc.) that contributes directly or indirectly to satisfying a human want or need.

Use your two new ECONOMIC APPLICATION TOOLS (goods and services) to answer the questions that were posed earlier in this lesson:

What are examples of stores that offer only goods to customers?

What are examples of stores that offer only services?

What are examples of stores that offers both goods and services?

Write your answers on a piece of notebook paper before you proceed with the lesson.

Please note some suggested answers listed below. If you are having trouble with this concept, go back and read the definitions for goods and services.

(1) A store that offers only goods could be a convenience store; self-serve service station; a grocery store where you bag the groceries; or a drug store.

(2) A store that offers only services may be a barber shop; carpet cleaners; lawn service or a dry cleaners.

(3) A store that offers both goods and services might be a restaurant, a grocery store that has a carry out service, a full-service service station (someone else pumps your gas). Why do most people pump their own gas? That's right, it costs a lot more for this service.

The trend over the past half century has been a steady rise in the number of workers in the service producing businesses.

Congratulations!

You have just used two brand new ECONOMIC APPLICATION TOOLS to answer the questions about goods and services.

Point to ponder!

The next time you are out and about shopping, look for businesses that advertise "free services".

Are these services really free?

Economics is about everyday life, focusing on the many ways in which people make a living. It is also about how people make important choices among the many things they want and/or need based on their limited resources.

Think of all the choices you have to make each day. Remember that when you make a choice to do something, you also make a choice to not do something else. This concept is very important in the study of economics.

Take the Wheel

Do you prefer the top box with the white background and the black lettering, or the box with the black background and the white lettering? Maybe you like this box better or none of the three. Make your choice now! Why did you make that choice?

Point to Ponder!

Choices! Did you ever buy something that you really wanted but could not afford? Did you have to give up something to satisfy this WANT or did you make a deal with someone so they would help you purchase this item, something you really could not live without?

REMEMBER, ECONOMICS IS ABOUT CHOICES!

You only have enough money to buy one food item:

The choice to buy the hamburger is the choice not to buy the pizza. In economics, this is an example of a secondary effect.

Personal Choices

Real Life Economics 101

Each day you must make an economic decision or choice in regard to what to do for lunch. This economic decision will be determined by many factors and questions including the following:

Where to eat lunch? What food will you order? How much will you order? How much time you have for lunch? How much money you have? What type of transportation is available? The type of food you ate last night. What is being served in the school cafeteria? Did you eat breakfast? Will you be eating a large meal later in the evening? Are you on a special diet?

Even More Personal Choices

Take some time to look at the clothes you wore to school today. Consider the economic decisions you had to make to purchase these clothes. Were these purchases motivated by fashion, price, the latest trend, color, trying to keep up with your friends, the fact you saw a commercial featuring a famous basketball player from Chicago, etc.?

Let's reconsider the Point to Ponder in regard to the clothing you have on today!

Did you ever buy something that you really could not afford?

Did you have to give up something to satisfy this WANT or did you make a deal with someone so they would help you purchase this item, something you really could not live without?

Point to Ponder!

There will always be secondary effects whenever an economic decision is made.

Remember the hamburger and pizza choice.

This was a choice as to how you satisfy a need using your scarce resources (only enough money for one item).

We will come back to the concept of secondary effects many times in these lessons.

he concept of secondary effects is a new ECONOMIC APPLICATION TOOL.

Real Life Economics 101

The economic conflict that you face when you shop for clothes or go to lunch is also found in society and government. If water pollution and unemployment are both problems, which of the two is the more serious? Go back to the allocation of technology resources for education or for the U.S. Navy.

Answering these types of questions will certainly be important in the determination of the right economic policy or plan of action for a nation.

Throughout history nations have faced the same problem. As a country's population grows, the need for more goods and services grows correspondingly. Resources necessary for production may increase; but there are never enough resources to satisfy the total desires of a nation.

Simply stated, economics is about how people and countries try to answer three basic questions:

(1) What should be produced?

(2) How should products be produced?

(3) For whom should these products be produced?

Look at the consumer goods shown on the right.

Which one is the most important to the American economy?

The For Whom question is really a series of questions about distribution.

Will everyone get an equal portion?

Should production be distributed according to need?

If so how do we determine need?

Who gets hamburger and who gets steak?

Another For Whom question would be; Should the children get computers or should the U.S. Navy get fighter jets?

Another way of defining economics.

Economics is classified as a social science. Like political science, sociology, anthropology and geography, it concerns people's attempts to organize the environment to satisfy their needs and wants.

Economics concentrates on satisfying material needs, such as food and shelter. Specifically, it concerns production, distribution and the consumption of goods and services.

Point to Ponder!

How are goods produced? A reminder that these goods will be consumed by people, businesses and the public sector (government). In making the decision as to what to produce, a nation is deciding the following: how it will use up its resources, and what not to produce. (Remember the choice to do something is also the choice not to do something else).

What are these production resources?

All production involves four separate production resources or factors.

These four factors of production include the following

natural resources: labor, capital, and management.

Whenever a television set, automobile, basketball, tire, loaf of bread, bridge, space station, or any other good is produced by an economy, these factors are consumed in the process.

Natural resources are the materials nature provides, raw material like trees, oil, water, etc.

Labor is human effort necessary to adapt the raw materials for human use.

Capital is any man-made instrument of production, a tool or a machine.

Management is the factor of production that directs the work of the other three factors.

Point to Ponder!

Some of the factors or resources consumed in production are renewable and some are not.

Write a definition for a renewable resource and a definition for a non-renewable resource?

We will refer to these definitions in later lessons.

Let's go back and examine the questions that were raised earlier in the lesson.

1. What is economics?

2. What exactly does an economist do?

3. By the way, what is a social scientist?

1. What is economics?

This question has been answered in all of the material we have covered in the first part of this lesson. Finding the answer to the first question will be an ongoing process that will continue throughout all of the economics lessons.

Let us now turn our attention to the second question.

2. What exactly does an economist do?

Economist job description.

Economists study the problems that may arise in the manner that we use our natural resources to provide goods and services. These resources-land, raw materials, and labor-are limited.

Economists may analyze the relationship between the supply of goods and services and the demand for them, and the ways in which goods are produced, distributed, and consumed.

Some economists are concerned with practical problems like the control of inflation, analysis of farm prices or wages, tax and tariff policies.

Other economists develop theories to explain causes of employment and unemployment or the ways in which international trade influences world economic conditions.

Many economists are involved in the collection and interpretation of data on widely varying economic problems.

Economists employed in colleges and universities teach the principles and methods of economics and conduct or direct research.

They frequently write and act as consultants, thereby putting into practice many of the new ideas that directly influence government and industry planning.

Economists in government plan and carry out studies about assessing economic conditions and the needs for changes in government policy.

Most government economists are in agriculture, business, finance, labor or international trade and development.

Economists employed by business firms provide management with information of decision making on matters such as markets and prices for company products.

These economists also examine the effect of government policies on business or international trade, and the advisability of expanding the company's business capacity.

All of these economists examine and conduct research in two main areas: macroeconomics and microeconomics.

Macroeconomics and microeconomics will be discussed in much greater detail in later lessons. For now you need to know the following information:

Microeconomics is the branch of economics that focuses on individual areas of the economy such as households or business firms.

Macroeconomics is the branch of economics that focuses on how human behavior affects all areas of the economy.

Let's go back and answer the last question.

3. By the way, what is a social scientist? A social scientist is someone who studies society and the interpersonal relationships of people within that society. How do we use our resources to answer the three basic questions:

(1) What should be produced? (2) How should products be produced? (3) For whom should these products be produced?

The next lesson is devoted to an in-depth examination of the social sciences of political science, sociology, anthropology and geography and how these academic subjects overlap with economics.

Economics is the study of how people try to satisfy their personal wants and needs. In studying economics you may at times pause to evaluate how successful nations have been in addressing the social, political and environmental needs of their citizens.

The central economic questions, decisions and problems for nations concerns the allocation of their limited resources to fulfill the unlimited wants and needs of their people. We will be considering that problem throughout these lessons.