What is Economics?

Why Study Economics?

Economics is simply
a social science that
focuses on the
choices people
make.

Knowing about economics can help us understand WHY
people make the choices they do

★

Why do some people choose
not to go to college?

★

Why would someone buy a
more expensive product
when a lesser priced good is
available?

★

Why would someone drive to
Florida when they could fly?

Economic reasoning is everywhere, appropriate, and
always useful

★ It can be used by any age

group or culture, in any
situation or context.

★ The insights it provides are

powerful and can help you
make sense of the
confusing world around you.

Knowing about economics can help us unlock mysteries of
human behavior

★

Many mysteries can be solved by learning
how to identify incentives.

★

Incentives are rewards or punishments that
influence people’s actions.

★

When incentives change, people’s behavior
changes in predictable ways.

By understanding economics, we can dispel common
myths and misconceptions.
★ Economics is all about institutions and

mathematical models

★ Economics is all about money
★ Bad choices have costs but good choices do

not

★ Sometimes people just have no choice

With economic knowledge, we can understand that
things are the way they are for a reason.
★ Why is the demand for Nintendo Wii’s so

great?

★ What is the price where the supply meets the

demand?

★ Why do so many people dislike monopolies,

but everyone seems to want to be one?

★ How can businesses stay in business when

they don’t earn a profit?

WHat is Scarcity?

A limited amount of
resources to meet
unlimited wants and

needs.

EVERYTHING is scarce!

Why do we have Scarcity?

We have Unlimited
Wants and Needs

But Limited Resources

Creates Scarcity…
So we need to make

Choices

Causes of Scarcity

1. Personal Perspective: your own feelings of
what is needed or wanted.

2. Poor Distribution of Resources: not using
your resources to their potential.

3. Rapid Increase in Demand: A sudden rush
to use resources can cause a shortage.

Ways we deal with Scarcity

1. Doing without something

2. Creating more resources

3. Making better use of our resources