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Introduction to Economics

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Human Wants and Needs

  • Survival related needs
  • Culturally determined wants
  • Characteristics of wants
  • Varied
  • Unlimited

Resources

  • Used to satisfy needs & wants
  • Four types of resources
    • Labor
    • Natural
    • Capital
      • e.g., machines and equipment
      • Greater efficiency through indirect production
    • Entrepreneurship--organizing skills
  • Characteristics of resources
    • Limited
    • Versatile
  • Technology--increases society’s ability to satisfy needs and wants

The Economic Problem

  • Limited resources & unlimited wants cause scarcity
    • Ways of dealing with scarcity
      • Increasing supply
      • Finding substitutes
      • Reducing demand
      • Violence
      • Prices
  • Economics--deals with methods of allocating scarce resources
    • There are three questions to be answered by every society
    • What to produce
    • How to produce
    • For whom to produce
  • Two related issues
    • Equity--how to divide the pie
    • Efficiency--how to make the pie bigger
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . factpetersen. (2007, October 22). Introduction to Economics. Retrieved January 08, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/university-studies/u-s-institutions/introduction-to-economics.html. This work is licensed under a Creative Commons License Creative Commons License