Friday, August 25, 2017 In your Economics notebook complete the following: Write the day of the week, the date, and the year. Write the question, “What are three scarce resources in this classroom?” Answer the question with at least three examples

Honors Papers and Podcasts See handouts One of each due by the end of the Unit

Review Economics is the science that studies the choices of people trying to satisfy their wants in a world of scarcity. © EMC Publishing, LLC

Review Every choice has a cost. Costs are not always money. Costs can be things like time, attention, friendship, sadness, fear, etc…..

Review Resources are needed to produce the goods and services that satisfy our wants. However, resources are limited.

Review Scarcity occurs when our wants are greater than the resources available to satisfy them. Scarcity results in the need to make choices. Regardless of our level of income, each of us must make a choice when purchasing goods or services.

Review An opportunity cost is the most valued opportunity or alternative we give up when we make a choice. Opportunity Costs usually meet the same function, but in a different way.

Wants vs. Needs

Wants vs Needs Needs= necessary for survival or to meet certain rules Wants= desires that go beyond the needs

Production Probability Frontier To learn about PPF’s we will Take a slide of notes Do an activity Create a PPF table and model Take 2 slides of notes

Production Probability Frontier Model that shows all possible combinations of two goods that an economy can produce Three main assumptions of the PPF model= Labor is fixed Resources are fixed Two goods are produced

Activity With your piece of paper create a fan or a paper airplane Number of students= Number of fans= Number of airplanes=

Resources are fixed, meaning there are no other pieces of paper Labor is fixed, there are no other available workers We will now make a graph that shows the Production Probability Frontier

Production Probability Frontier The graph creates two regions Below the curve is what is available to us Beyond the curve is what is unavailable to us

Exhibit 1-2 from the Student Text Combinations A–D show us examples of how many skis and snowboards the economy is capable of producing in a given amount of time. These combinations, when graphed, form a curve. The economy can produce any combination of skis and snowboards along or below this curve. 1 The production possibilities frontier is sometimes referred to as a production possibilities curve. © EMC Publishing, LLC

Exhibit 1-2 from the Student Text The economy can produce any of the four combinations of snowboards and skis in part (a). These combinations are plotted in part (b). The economy can produce any combination of snowboards and skis along, or below, the PPF. © EMC Publishing, LLC

Exhibit 1-2 from the Student Text Compare points B and C. When the economy reduces snowboard production from 40,000 to 25,000, the production of skis is able to increase from 20,000 to 40,000. The opportunity cost of not producing 15,000 snowboards is equal to the production of 20,000 skis. Point F shows us a production combination that is not possible. There are not enough resources available to produce this quantity of both skis and snowboards. © EMC Publishing, LLC

Production Probability Frontiers can shift (move) The PPF is determined by the level of resources. If resources decline the PPF shifts to the left. If resources increase the PPF shifts to the right.