Econ 201 Donna Bueckman MWF 1:25-2:15 Lecture 1/9/15 What Economics is All About -economics-the study of how society manages its resources-scarcity-resources are limited • relative scarcity (example: local grocery store out of bread) • absolute scarcity (example: Mexico lime shortage…affects the world) • time=ultimate scarce resource • limited nature of society’s resources • managing scarce resources = organizing economic activity -to manage you must determine: • WHAT to produce • HOW to produce it • HOW MUCH production • WHO gets product (consumers) Economic Systems -traditional economy- viable, but not efficient -command economy- similar to communism -market economy- most efficient Market System -Division of Labor- Wealth of Nations: Adam Smith(1776) -specialization -economies of scale -trade-Smith- households and firms act as if “led by an invisible hand” to promote general economic well-being -markets organize economic activity through