Supply & Demand - Faculty.utep.edu

y teachers, administrators, and other employees.Land, such as the iron ore, granite, and timber usedto make the building and desks, as well as the landwhere the school is located, is also needed. Finally,entrepreneurs are needed to organize the other threefactors and make sure that everything gets done.T eScope of con,omicsEconomics is the study of human efforts tosatisfy what appear to be unlimited andcompeting wants through the careful use of relativelyscarce resources. As such, it is a social sciencebecause it deals with the behavior of people asthey deal with this basic issue. There are four keyelements to this study: description, analysis, explanation,and prediction.Des ~p ioEconomics deals with the description of economicactivity. For example, you will often hearabout the Gross Domestic Product (GDP)-thedollar value of all final goods and services, andstructures produced within a country's borders in a12-month period. GDP is the most comprehensivemeasure of a country's total output and is a keymeasure of the nation's economic health.Economics is also concerned with what is producedand who gets how much, as well as with topicssuch as unemployment, inflation, internationaltrade, the interaction of business and labor, and theeffects of government spending and taxes.Description is important because we need toknow what the world around us looks like.However, description is only part of the picturebecause it leaves many important "why" and "how"questions unanswered.AnalysisIn order to answer such questions, economicsmust focus on the analysis of economic activity aswell. Why, for example, are prices of some itemshigh while others are low? Why do some peopleearn higher incomes than others? How do taxesaHect people's desire to work and save?UNITED STATES LEIN ENTREPRENEURSA vast majority of the owners of the nearly 20million businesses in the United States are entrepreneurs.Most either work for themselves orhave a few employees.A 10-nation study found that the United Statesleads when it comes to entrepreneurs. According tothe survey, nearly 1 in 12 Americans is trying to starta new business. In second place is Canada. The studyalso shows a strong link between business start-uprates and overall economic growth. The graphshows the percentage of the adult population startingnew busi nesses.ItalyBritain $SGermany1=::::;;;;:;~4'"DenmarkFrance,FinlandU.S.CanadaSource: 1999 Global Entrepreneurship Monitor-Critical Thinking1. AnaJyzlng Information In which nation isentrepreneurial activity strongest? Weakest?2. ki 9 Co p riso s How does the levelof North America's entrepreneurial activitycompare with Europe's?3. Dra ing Conclusions Do you think there isa link between business start-up rates andoverall economic growth? Why or why not?CHAPTER 1: WHAT IS ECONOMICS? 9