Bell Ringer Generate a list of ten things that come to mind when you hear the word “Economics”

Goods and Services Before getting into the definition of economics, you must have some basic understanding of the difference between a good and a service.

Goods and Services A “good” is something that is tangible that satisfies people’s wants and desires A “service” is something that is intangible that satisfies people’s wants and desires

Wants and Desires Now you know the difference between a good and a service, and know the difference between tangible and intangible, what are the wants and desires of all individuals??

OUR WANTS ARE UNLIMITED! WE WANT EVERYTHING!!! OUR WANTS ARE UNLIMITED!

Wants and Desires We want food, we want water, we want good grades, we want a haircut, we want money, we want more money, we want a home, we want groceries, we want furniture, we want a car, we want a relationship, we want happiness, we want children, we want to breathe one more breath, we want, we want, we want… The list is endless.

Definition of Economics So… what is the definition of economics? “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.” Great. Sooo… what does that mean?

Definition of Economics “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

Definition of Economics “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

Definition of Economics “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

Scarcity What does it mean when something is scarce? There is a limited amount of it. All resources are limited. It’s as if there’s a constant fight between our unlimited wants and our limited resources.

Definition of Economics Economics = Scarcity Scarcity = Wants > Available Resources Therefore… Economics = Wants > Available Resources

Definition of Economics http://www.youtube.com/watch?v=nWPrMmv1Tis

Create a definition of economics in exactly 20 words. Review Create a definition of economics in exactly 20 words.

Bell Ringer Goods are _________ ; services are __________ Wants are __________; resources are __________ Economics = ________ > __________

Objectives Define the four types of resources. Explain why every decision involves trade- offs and opportunity cost. Describe what economist Milton Friedman meant when he said “There’s no such thing as a free lunch.”

Types of Resources 1. Land Land is a scarce resource because there’s a limited amount of it. In economics, land means any natural resource within, on, or above the earth. Examples?? Air, water, raw materials

Types of Resources 2. Labor Labor is a scarce resource because there’s only so many people both willing and able to do certain jobs.

Types of Resources 3. Capital In economics, capital refers to a physical item used in the production process. Examples?? Capital is a scarce resource because there are a limited number of factories, machines, etc., and only a certain number of people that can afford them.

Types of Resources 4. Entrepreneurship An entrepreneur is an individual who is willing to take a risk to start a business. Why are entrepreneurs a scarce resource? Because there are a limited number of individuals that want to start their own business.

Trade Offs & Opportunity Cost What did you give up in order to come to school this morning? In other words, what else could you be doing with your time?

A trade off is an exchange for one thing in return for another. All decisions require trading one goal for another. Let’s say you’re going to go out on Friday night. You have lots of choices of what you can do…

Trade Off Go out with your friends. Stay home and watch TV. Go on a date. Go to the football game. Review your economics notes. All of these choices, except the one you choose, are your possible trade offs.

What is one trade off of going on a date? Go out with your friends. Stay home and watch TV. Go on a date. Go to the football game. Review your economics notes. What is one trade off of going on a date?

Trade Off Go out with your friends. Stay home and watch TV. Go on a date. Go to the football game. Review your economics notes. Let’s say your second choice is to go out with your friends. If so, then this is the trade off of going on a date.

Opportunity Cost Go out with your friends. Stay home and watch TV. Go on a date. Go to the football game. Review your economics notes. In economics, we call the value of the next best alternative the opportunity cost.

Opportunity Cost Go out with your friends. Stay home and watch TV. Go on a date. Go to the football game. Review your economics notes. A simpler definition of opportunity cost is the cost of making a decision.

Go on a date. Opportunity Cost Go out with your friends. Stay home and watch TV. Go on a date. Go to the football game. Review your economics notes. When you give up hanging out with your friends to go on a date, you hope to gain at least the same value in terms of fun and excitement… if you know what I mean.

Opportunity Cost But what is the actual cost of going on your date? Remember that cost means more than just monetary cost!! With an elbow partner, come up with some other costs for choosing to go on a date instead of going out with your friends.

Opportunity Cost Monetary cost Time cost Social cost Emotional cost Health cost There’s no such thing as a free lunch!

Opportunity cost is the value or cost of this decision. Review A trade off is the thing(s) you give up to get one thing in return for another. Opportunity cost is the value or cost of this decision.

Review Pg. 7, Questions #2 & 9 For #9… “factors of production” = scarce resources

List five things that were a trade-off for coming to school today. Bell Ringer List five things that were a trade-off for coming to school today. For one of your trade-offs, identify the opportunity cost.

Objectives Explain how the phrase “guns or butter” relates to trade-offs and opportunity cost. Describe the difference between “efficiency” and “underutilization”

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed.” -President Dwight D. Eisenhower How does this quote relate to the economic concepts of trade-offs and opportunity cost?

“Guns or Butter” How does a nation decide what and how to produce? The idea that a country that decides to produce more military goods (“guns”) has fewer resources to produce consumer goods (“butter”), and vice versa.

Efficiency vs. Underutilization National economies (and individual people) try to make the most of their available resources. When an economy utilizes its resources well, it is said to be efficient. If it does not, it can run the risk of underutilization.

Efficiency vs. Underutilization Efficiency is where an economy uses its resources in a way that maximizes the output of goods and services Underutilization is where an economy uses fewer resources than it is capable of using

Review Working with an elbow partner, come up with a specific example of a “guns or butter” decision on the local, national, or global level.

Assignment Go to page 21 in the textbook. Working with a partner or on your own, read “Should the federal government spend money on space exploration?” Read the three documents at the top of the page and answer questions 1-3. Then, compose a paragraph (4-6 sentences) answering the following question: Should the federal government spend money on space exploration? Why/why not?

Crash Course Econ “Intro to Economics” - https://www.youtube.com/watch?v=3ez10ADR_gM