TOPIC 1: INTRODUCTION OF ECONOMICS

The Nature of Economics

• the economic problem - wants, resources, scarcity
• the need for choice by individuals and society
• opportunity cost and its application through production possibility frontiers (PPFs)
• future implications of current choices by individuals, businesses and governments
• economic factors underlying decision-making by:

    - individuals: spending, saving, work, education, retirement, voting and participation in the political process
    - business: pricing, production, resource use, industrial relations
    - governments: influencing the decisions of individuals and business

The Economic Problem

Source: http://www.bized.co.uk/educators/16-19/economics/micro/presentation/econintro_map.htm

WATCH the following video clips

Opportunity Cost and
​Production Possibility Frontiers (PPFs)

WATCH the following video clips about the PPC
NOTE: In HSC Economics we refer to this graph as the Production Possibility Frontier (PPF)

READ through the following websites:

• Economics Basics: Production Possibility Frontier, Growth, Opportunity Cost and Trade (Investopedia)
• The Production Possibility Frontier (netmba)

PLAY: The Desert Island Trading Game
WATCH: Opportunity Cost (YouTube video by mjmfoodie)

READ: The Production Possibility Frontier (mbanet)
WATCH: The two PPC YouTube videos from mjmfoodie below.

Future implications of current choices

WATCH: Consumer and Capital Goods in PPF

THINK about the decisions individuals need to make with limited resources.  For example:

• study and defer income vs income now
• number of hours to work vs hours to relax
• house vs holiday

THINK about the decisions businesses need to make with limited resources.  For example:

• labour vs capital
• spend now vs spend later
• increasing wages (may improve productivity/output) vs not increasing wages (reducing costs)

THINK about the decisions governments need to make with limited resources.  For example:

• health vs education
• which industries to support
• which products to tax

THINK about how government decisions affect individuals and businesses.

COMPLETE the revision worksheet:

2014econintroworksheet.doc
File Size:	69 kb
File Type:	doc

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EXTENSION: 
Read the following articles:

• There's no denying it: we're gluttons for punishment
• How spending money can make you much happier

Think about how rational consumers really are.