Introduction to Economics II

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Introduction to Economics II

• Mass Producer Vs. Boutique

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Web Lecture 7.2 Review

1. What is an example of a scenario when you would
   use a decision making model?
2. What is the difference b/t scarcity and shortage?
3. What is a trade-off and give an example of one if
   you choose to be a mass producer vs. a boutique?
4. What is an example of a business that produces
   goods?
5. What is an example of a business that offers a
   service?

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Scarcity and Shortages

• Scarcity occurs when there are limited quantities
  of resources to meet unlimited needs or desires
• Shortages occur when producers will not or cannot
  offer goods or services at current prices
• Examples of limited resources?

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Trade-offs and Opportunity Cost

• Trade-offs are all the alternatives that we give
  up whenever we choose one course of action over
  others.
• The most desirable alternative given up as a
  result of a decision is known as opportunity
  cost.
• All individuals and groups of people make
  decisions that involve trade-offs.
• Examples of trade-offs?

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The Decision-Making Model

• Economists encourage us to consider the benefits
  and costs of our decisions.
• Examples of a decision making model?

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Goods and Services

• Goods are physical objects that consumers may
  purchase.
• E.g. shoes, shirts, etc
• Services are actions or activities that one
  person performs for another.
• E.g. waiters, garbage men, bank tellers, etc

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Consumers and Producers

• Consumers are people that buy goods that are
  produced and distributed in the marketplace.
• Producers make their goods to be sold in the
  marketplace.
• Pricing is determined by the amount of money
  consumers are willing to pay for specific goods.

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Wages and Salary

• Wages are the amount paid to laborers based on
  their skill level and education, as well as their
  experience.
• Jobs are often categorized into four skill
  levels
• Unskilled labor
• Semi-skilled labor hourly wage
• Skilled labor
• Professional labor Salaried workers

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Warm Up- Survey of Products
Shirts Pants Shoes Accessories

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Create a decision-making model
Mass Producer Boutique
Land What renewable/ nonrenewable materials will you use?
Labor Who will you need to hire to produce and sell your goods?
Capital What man made products will you use to make your goods?
Entrepreneurship What makes your product so special?