Unit 1: Chapter 1- Economic Concepts What is Economics Unit 1: Chapter 1- Economic Concepts What is Economics? -Scarcity -Factors of Production -

Essential Questions- Do now! Take a Textbook- write the number on the book list Take out your notebooks/ Paper Are you satisfied with the possessions you have in life? If not, why? If yes, why? Identify 5 wants you have right now. List two ways how scarcity has impacted your life: socially, and finically.

Objectives Understand why scarcity affects everyone. List the three economic questions that societies face because of scarcity. Describe the four factors of production and their uses.

KEY CONCEPTS Needs — things necessary for survival Wants — desires that can be met by consuming products Needs — things necessary for survival Scarcity — lack of resources available to meet all human wants not a temporary shortage Economics — study of how people use resources to satisfy wants examines how individuals and societies choose to use resources organizes, analyzes, interprets data about economic behaviors develops theories, economic laws to explain economy, predict future

How does scarcity effect us? In a group of three Consumers Producers Government

What I want and what I need Want: a way of expressing a need. “I want to eat lunch at Chipotle.” Jordan’s Clothing from Hollister Iphone and ipad Mercedes Benz 5 bedroom house for 2. Need: Basic requirement needed for survival. “I need to eat, so I can concentrate in school.” Food Water Shelter Clothing shoes

3 Basic Economic Questions In a group of 3 read one of the following section on pages 6-7 and summarize it for your partners What to Produce? How to Produce? For Whom to Produce? Why do we need to consider these questions?

Factors of Production Land “gifts of nature” / natural resources not man made Fields, deserts, livestock, sunshine and climate What social factors may affect the availability of land? Labor People with efforts, abilities, and skills Non-entrepreneurs What social factors may affect the availability of labor? Capital Tools, equipment, machinery, factories. Items used to produce goods or services Financial capital: What is it? What social factors may affect the availability of capital? Q: How are these three factors interconnected?

Entrepreneurship Entrepreneurship — vision, skill, ingenuity, willingness to take risks Entrepreneurs anticipate consumer wants, satisfy these in new ways develop new products, methods of production, marketing or distributing risk time, energy, creativity, money to make a profit

Review of Section 1: What is Economics? 1. Which response best explains why the study of economics is important? Describes our standard of living Become better decision makers Increase our consumption of consumer goods Determine what goods out to be produced 2. Which response best explains the money used to buy the tools and equipment needed for production? Capital goods Financial capital The factors of production Wealth 3.

Which response does not explain the factors of production? entrepreneurship money Labor capital

Economic Concepts GDP: the dollar value of all final goods and services and structures produced within a countries borders in a 12-month period.

Peer Activity: Follow Up Look through advertisement ads Find wants and need and post them. Try to find at least 1 form of Land, labor, and capital through pictures or words Post on construction paper.

Economics Choices: Opportunity Cost, You’ve Economized! VS. How do incentives and utility influence your decision making? Making Choices involves… Motivation for Choices TINSTAAFL Decision –Making Process How do trade-offs and opportunity cost influence your cost-benefit analysis? Application: You have enough money to buy either an iPod touch player that is on sale or some school supplies you want. What incentives and utility would guide your decision?

Marginal Cost and Marginal Benefits Cost: additional cost of using 1 more unit of a product Benefits: additional satisfaction from using 1 more of a product Turn to page 16 Complete a decision making grid in your group under application C.

Analyzing Decision Making Grid Turn to page 15 in your textbook Follow along as we review the grid Follow up questions: What is Max’s opportunity cost of three hours of study? What is Max’s marginal cost moving from a grade of B+ to a grade of A-? 2 pts EC **What prediction would analyzing the marginal cost and marginal benefits illustrate?

Production Possibilities Curve PPC Illustrates the impact of scarcity on an economy by showing the max number of goods and services that can be produced using limited resources. (Based on assumption) Assumptions Resources are fixed All resources are fully employed Only two things can be produced Technology is fixed PPF?

What do PPCs teach us? Our efficiency as a nation Underutilization Law of increasing opportunity cost Shifts in PPC

Branches of the Economic Macroeconomics Microeconomics Whole economy Economic growth, stability, and international trade Interest: money, banking, finance, government taxation and spending polices, unemployment and employment inflation Individual economy Consumer markets, business markets, and labor markets Markets, prices, costs, profits, competition, government regulation, consumer behavior, business behavior

Houston we have a problem! Task Shortage of Money Scarcity of Items Popcorn Pop tarts Warheads Alternatives Choices What will it cost? i.e. buying a $10,000 used car, going to a movie with friends next Thursday night Form groups of 2 or 3 5 minutes to discuss ways to distribute the popcorn (remember our constitution) list all possible ways as a class (No discussion) Lets Group categories Advantages and Disadvantages 1 vote each to determine who gets the popcorn

Why is it important for economist to use to positive and normative economics? illustrations Read Section 4 Create the table below and complete this section with a partner and be ready to discuss. Concepts Similarities Differences Charts and Tables vs. Graphs Micro vs. Macro Positive vs. Normative

Adam Smith Reading What division of labor trends are found in smaller factories? What is the division of labor needed? What problems do you believe may happen with the division of labor visible in a large factory? What was Adam Smith’s purpose of this article?