ECON 1113 1st Edition Lecture 1 Outline of Current Lecture I The Basic Economic Problem A Two Economic Facts B Economic Resources C Scarce Economic Resources vs Unlimited Material Wants Current Lecture I The Basic Economic Problem A TwoEconomic Facts 1 Economic resources are scarce or limited 2 Desires for particular types of goods and services or materials are effectively unlimited B Economic Resources 1 Labor human abilities to use and produce material goods and services 2 Capital human made aids to production a Example tools machines factories transportation networks etc b goods used to produce other goods are capital goods c Goods consumed by themselves are consumer goods 3 Land all natural resources useable in production a function of technology 4 Entrepreneurship human resources a Bring together other economic resources b Bear risk c Motivated by self interest as expressed by a desire to maximize profits d Display an idea about how to maximize profit i Good ideas profitable ii Bad ideas not profitable example rubber frying pans produce losses C Scarce Economic Resources vs Unlimited Material Wants 1 The limited resources satisfy the unlimited wants as best as possible 2 People must make choices because resources are limited 3 People unavoidably encourage cost of products and services when a choice is made 4 Two Types of Costs a Explicit out of pocket Cost money spent when a choice is made and cannot be spent on something else These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute b Implicit Cost alternative foregone sacrificed when a choice is made but do not require out of pocket payments c Example Cost of a College Education i Explicit Costs money payments tuition food room board books fees miscellaneous ii Implicit Costs earnings if employed and not attending college iii Special Circumstances of This Example Wayman Tisdale OU basketball player i Explicit Costs at OU 0 because of scholarships ii Implicit Costs as a professional basketball player millions of dollars playing in the NBA is more lucrative
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