Talk It Up Discuss & agree upon a definition for “good” and for “service” as it pertains to business and marketing. Identify one example of each.

34 - Identify the difference between needs & wants. Economic Decisions 34 - Identify the difference between needs & wants.

Economics Defined Study of producing, distributing, and consuming goods and services Involves decisions regarding the use of resources (natural, human, capital) Decisions are made by: Individuals, consumers Businesses, producers Societies, government

The Economy’s Driving Force WANTS NEEDS Non-essential Add to the quality of life a.k.a. luxuries Private wants (indiv/groups) Public wants (roads, schools, parks) Essential to human life Basic needs for survival Examples: food, water, clothing, shelter Wants and needs determine what goods and services will be produced by businesses. Individuals (consumers) make decisions on what to buy – they vote with their dollars. Private wants are what individuals or groups of people desire. Public wants are widely shared by many people (society), such as highways, public libraries, and parks. The government typically satisfies public wants.

Table Time! Think about your current situation as a high school student, teenager, athlete, etc. Discuss three current wants (W) and three needs (N) in your life. Think about it! How can the fulfillment of a basic need lead to a want? Our wants are limited only by our imagination. One want fulfilled leads to more wants – for example, your fresh kicks will satisfy you temporarily, but soon there will be nicer ones.

What satisfies our needs & wants? Goods are things you can see & touch. Services are satisfied through the efforts of other people. In order to create goods or to provide a service, you need resources.

36 – Distinguish among the factors of production. Economic Resources 36 – Distinguish among the factors of production.

Economic Resources are the means through which goods and services are produced. Economic resources are also known as factors of production.

Factors of Production Human Resources Natural Resources Capital Resources Factors of production are the three types of resources needed in order to produce goods and services. Natural – all materials that come from the earth Human – all the people who work to produce goods and services, including entrepreneurs Capital – the tools, equipment, and buildings used to produce goods and services We make decisions about the way that factors of production will be used. These are the resources that are used to meet society’s needs and wants.

All materials that come from the Earth (in their natural state) Factors of Production All materials that come from the Earth (in their natural state) Natural Resources Factors of production are the three types of resources needed in order to produce goods and services. Natural – all materials that come from the earth Human – all the people who work to produce goods and services, including entrepreneurs Capital – the tools, equipment, and buildings used to produce goods and services We make decisions about the way that factors of production will be used. These are the resources that are used to meet society’s needs and wants.

Factors of Production Human Resources All of the people who work to produce toods and services, including entrepreneurs Factors of production are the three types of resources needed in order to produce goods and services. Natural – all materials that come from the earth Human – all the people who work to produce goods and services, including entrepreneurs Capital – the tools, equipment, and buildings used to produce goods and services We make decisions about the way that factors of production will be used. These are the resources that are used to meet society’s needs and wants.

The tools, equipment, and buildings used to produce goods and services Factors of Production The tools, equipment, and buildings used to produce goods and services Capital Resources Factors of production are the three types of resources needed in order to produce goods and services. Natural – all materials that come from the earth Human – all the people who work to produce goods and services, including entrepreneurs Capital – the tools, equipment, and buildings used to produce goods and services We make decisions about the way that factors of production will be used. These are the resources that are used to meet society’s needs and wants.

Economic Choices – Why? We make choices about how resources are used to meet needs and wants. Example: U.S. oil supply

Natural Resources Raw materials found in nature Examples: Wind Water Minerals Plant life Examples: wind, water, plant life, wild life, natural gas, minerals Limitations: geographic availability, limited quantity, pollution/contamination, out of season, environmental factors (drought, natural disasters) Implications: prices go up when resources are limited, which causes prices of goods to go up if they require those resources

Natural Resources Limitations Geographic availability Limited quantity Pollution/contamination Out of season Environmental factors Drought Natural disasters (Harvey) Examples: wind, water, plant life, wild life, natural gas, minerals Limitations: geographic availability, limited quantity, pollution/contamination, out of season, environmental factors (drought, natural disasters) Implications: prices go up when resources are limited, which causes prices of goods to go up if they require those resources

Natural Resources Implications Prices go up when resources are limited Which means prices of goods requiring those resources also go up Examples: wind, water, plant life, wild life, natural gas, minerals Limitations: geographic availability, limited quantity, pollution/contamination, out of season, environmental factors (drought, natural disasters) Implications: prices go up when resources are limited, which causes prices of goods to go up if they require those resources

Human Resources Human effort used for production Work force includes everyone willing and able to work How many of you are able to lift 50 pounds or more? 100 pounds? How many of you are willing to go pick up trash? TV Show: World’s Dirtiest Jobs. Limitations: Labor shortages result from (1) lack of training or skills needed and (2) lack of interest in certain jobs (i.e., fast food, custodial work) Businesses can respond by: offering higher wages, offering training or staff development, increase promotions and incentives, increase technology

Human Resources Limitations Labor shortages result from: (1) lack of training or skills needed and (2) lack of interest in certain jobs (i.e., fast food, custodial work) How many of you are able to lift 50 pounds or more? 100 pounds? How many of you are willing to go pick up trash? TV Show: World’s Dirtiest Jobs. Limitations: Labor shortages result from (1) lack of training or skills needed and (2) lack of interest in certain jobs (i.e., fast food, custodial work) Businesses can respond by: offering higher wages, offering training or staff development, increase promotions and incentives, increase technology

Human Resources Businesses can respond by: Offering higher wages Offering training and/ or staff development Increasing promotions and incentives Increasing technology How many of you are able to lift 50 pounds or more? 100 pounds? How many of you are willing to go pick up trash? TV Show: World’s Dirtiest Jobs. Limitations: Labor shortages result from (1) lack of training or skills needed and (2) lack of interest in certain jobs (i.e., fast food, custodial work) Businesses can respond by: offering higher wages, offering training or staff development, increase promotions and incentives, increase technology

Capital Resources Physical capital includes other items required for production Real Estate / Buildings Machinery Tools (technology) Transportation Physical Capital – buildings, furniture, machinery, tools (computer equipment, technology), transportation, or other items required to produce goods and services Limitations: maintenance (repair, upkeep), quality, limited usable life

Capital Resources Limitations maintenance quality limited life span - repair/upkeep quality limited life span Physical Capital – buildings, furniture, machinery, tools (computer equipment, technology), transportation, or other items required to produce goods and services Limitations: maintenance (repair, upkeep), quality, limited usable life

Discuss … Is it possible to produce a good or service using only one resource? Why or why not?

Short Break… Please take a card.

For a Limited Time Only… Now Available! 2 A’s 4 B’s 11 C’s 4 D’s 2 F’s First come, first serve! Anyone with an ‘A’ or ‘B’ is guaranteed, no matter what you do the rest of the block. Anyone with a C or D has a starting point & can work to improve by the end of class. Anyone with an F or an incomplete (no grade) has to retake the class next year. Alternatively: Popcorn Scarcity Activity http://ecedweb.unomaha.edu/lessons/popcorn.htm

What Happened?! What did you want? What did you actually need? What was the fundamental problem? Is it fair that those who got A’s and B’s don’t have to do anymore work? How did it make you feel to know you had to try again next year, no matter what you do here today?

37 – Explain the relevance of scarcity to economics.

The Basic Economic Problem Resources limit the number of wants and needs that can be satisfied. Most consumers in the U.S. can satisfy their basic needs. Most people have unlimited wants, so we have to make choices. Basic Needs + Unlimited Wants Economic Resources

What is Scarcity? Shortage of resources Conflict between unlimited wants and limited resources [ Society’s Wants & Needs ] – [ Available Resources ] As a society, we have to manage choices that affect how wants and needs are satisfied. The way we manage a limited resource like gas can affect other wants and needs. Is there a scarcity of gasoline? Why? How has it affected economic decisions? Individuals: [ Private Wants – Discretionary Income ] Businesses: [ Unlimited Wants – Economic Resources ] Society: [ Public Wants – Economic Resources ] Your Wants & Needs Your Income

Economic Choices Economic Decision Opportunity Cost Potential Lost Things Given Up Your choice A trade off – weighing costs vs. benefits – occurs when a choice is made between two or more options. The opportunity cost is what you gave up by choosing one option instead of another. Every choice has a cost and/or benefit! As individuals, we have to make choices and prioritize our spending. Example: trade off between going to the movies and finishing your homework

Decision Making If I offer to give you something for nothing, is there a cost? Does your choice have a cost? What is the opportunity cost? http://www.councilforeconed.org/lesson-resources/lessons/sample-lessons/Focus_Personal_Decision_Making_Sample_Lesson.pdf

Dilemma of the Day How does scarcity impact individual decisions? http://www.councilforeconed.org/lesson-resources/lessons/sample-lessons/Focus_Personal_Decision_Making_Sample_Lesson.pdf

Closing Economics – producing, distributing & consuming Good vs. Service Wants vs. Needs Factors of Production Scarcity Trade Off Opportunity Cost