Economics -- Week 4, Part A

Economics is the study of the choices that people make to satisfy their needs and wants. Those choices involve resources - anything that can be used to satisfy a consumer's want or need. Economists generally recognize four categories of resources: natural resources, human resources, capital resources, and entrepreneurship. VIDEO OBJECTIVES - Define economics - Identify the factors of production - Determine the goal of entrepreneurship

Hegemony is an indirect form of government, and of imperial dominance in which the hegemon rules geopolitically subordinate states by the implied means of power, the threat of force, rather than by direct military force. In Ancient Greece hegemony denoted the politico–military dominance of a city-state over other city-states. Limited War, Civil War and Guerilla War are also discussed in this type of warfare.

Scarcity is the basic fact of economic life. Human needs and wants are always greater than the resources available to satisfy them. Thus, choices must ben made concerning how to best use the limited resources available. To make these choices, an economic system or society must answer three basic economic questions. Once an economic system has answered these questions, production must be carried out as effectively as possible. To reach the highest possible levels of productivity, producers may rely on division of labor and specialization. VIDEO OBJECTIVES - Determine why scarcity exists - Identify the issues that producers must address to distribute resources - Explain why producers study productivity

The two motivations for international trade are the fact that it is voluntary and that it creates wealth. International trade encourages individuals and businesses to specialize - to produce a limited number of goods and services - and leads to worldwide interdependence. Specialization may occur because of particular human or national resources unique to a nation. How a nation decides what to produce is determined by absolute and comparative advantage. VIDEO OBJECTIVES - Explain how specialization encourages trade - Explain how absolute advantages can influence economic choices - Explain how comparative advantages can affect a nation's economy

The price system's limitations sometimes lead governments to intervene in the market. Governments may set prices by establishing price ceilings and price floors that are intended to protect producers and consumers from dramatic price swings. Managing prices interferes with the normal interaction between supply and demand, however, and can maintain or even worsen market imbalances. VIDEO OBJECTIVES - Explain why governments sometimes set prices - Explain what governments try to accomplish through price floors, price ceilings, and rationing - Explain what happens when governments manage prices