Introduction into economics

„Economics is in the air…”

 The Basics

Economics – the study of how individuals and societies make decisions about
ways to use scarce resources to fulfill wants and needs.
 Scarity: unlimited wants and needs but limited resources
 Because ALL resources, goods, and services are limited – WE MUST MAKE CHOICES!!!!

T
 We make choices about how we spend our money, time, and energy so we can fulfill our NEEDS and
S
WANTS
C O this is what we call in
economics:
I T Y
 With every choice we make we also make a choice what no to do/buy/eat/etc,

U N
R T
P O
O P
Opportunity cost

OPPORTUNITY COST = The Value of the Next Best Choice

 Helps us view the true cost of decision making
 Implies valuing different choices

Wow, finally a video here!!!

Choices – Benefit-cost analysis

Benefit-cost analysis: Whenever people decide whether the advantages of a

particular action are likely to outweigh its drawbacks, they engage in a form
of benefit-cost analysis…

What Is TANSTAAFL? - VIDEO AGAI

N!
-> In other words, there’s always a cost to any decision.
And finally:
MONE
Y
 Money is anything that serves as a medium of exchange. A medium of exchange is anything that is widely
accepted as a means of payment. In Romania under Communist Party rule in the 1980s, for example, Kent
cigarettes served as a medium of exchange; the fact that they could be exchanged for other goods and
services made them money.
 Functions of money:
 Medium of exchange
 Store of value
 Unti of value

 The most important thing about money….

Types of money

 Commodity money: is money that has value apart from its use as money
 Gold, silver
 Problems: quantity can fluctuate; vary in quality.

 Fiat money: is money that some authority, generally a government, has ordered to be accepted as a medium of exchange.
  is a future obligation as it is simply a promise to pay in the future.
But why do we accept is? Because everybody has the:

BELIE
What’s next?

Economics is divided into two categories: microeconomics and

macroeconomics. 
Microeconomics is the study of individuals and business decisions, while macroeconomics looks at the decisions
of countries and governments.

Microeconomics: SUPPLY & DEMAND!

Thank you for listening, see you next week!

Sources:
 https://www.investopedia.com/
 https://www.econlib.org/library/Topics/HighSchool
 https://www.britannica.com/topic/money
 https://open.lib.umn.edu/principleseconomics/chapter/24-1-what-is-money/