Thinking Like An Economist Economic Enigmas Thinking Like An Economist

Activity: Analyzing Enigmas Get into pairs. Each student will need a copy of Student Handout A. In this activity, you and your partner will use the principles of economic thinking to help analyze several economic enigmas. enigmas = puzzles or riddles Some economists study economic enigmas and have written books, such as Freakanomics and The Economic Naturalist, to explain them.

Activity: Analyzing Enigmas Economic Enigma 1 Step 1: Carefully consider the economic data shown on the next slide. After analyzing the graphs, table, and photograph, identify the economic enigma you think these data lead to. When asked by your teacher, share your economic enigma with the class.

Activity: Analyzing Enigmas Economic Enigma 1 Record the actual enigma (see below) in the appropriate place on Student Handout Why do people pay for bottled water when it is so much more expensive than tap water?

Activity: Analyzing Enigmas Economic Enigma 1 Step 2: On your handout, list any principles of the economic way of thinking that help explain this enigma. Principles of Economic Thinking Principle 1: Scarcity Forces Tradeoffs Principle 2: Costs Versus Benefits Principle 3: Thinking at the Margin Principle 4: Incentives Matter Principle 5: Trade Makes People Better Off Principle 6: Markets Coordinate Trade Principle 7: Future Consequences Count

Activity: Analyzing Enigmas Economic Enigma 1 Step 3: Choose the one principle that you believe best explains this enigma. On your handout, describe why.

Activity: Analyzing Enigmas Think back to your response for the Preview question: If you could choose between two nearly identical products–one that is free and one that you have to pay for–which would you choose? Why? How might your response have been different if you had applied the principles of economic thinking to this Preview question?

Activity: Analyzing Enigmas Economic Enigma 2 Step 1: Carefully consider the economic data shown on the next slide. After analyzing the statistics, graph, and other information, identify the economic enigma you think these data lead to. When asked by your teacher, share your economic enigma with the class.

Activity: Analyzing Enigmas Economic Enigma 2 Record the actual enigma (see below) in the appropriate place on Student Handout Why are there so many Starbucks so close together?

Activity: Analyzing Enigmas Economic Enigma 2 Step 2: On your handout, list any principles of the economic way of thinking that help explain this enigma. Principles of Economic Thinking Principle 1: Scarcity Forces Tradeoffs Principle 2: Costs Versus Benefits Principle 3: Thinking at the Margin Principle 4: Incentives Matter Principle 5: Trade Makes People Better Off Principle 6: Markets Coordinate Trade Principle 7: Future Consequences Count

Activity: Analyzing Enigmas Economic Enigma 2 Step 3: Choose the one principle that you believe best explains this enigma. On your handout, describe why.

Activity: Analyzing Enigmas Think back to your response for the Preview question: If you were opening a new business, would you select a location closer to or farther away from a business that sold a similar or even identical product? Why? How might your response have been different if you had applied the principles of economic thinking to this Preview question?

Activity: Analyzing Enigmas Economic Enigma 3 Step 1: Carefully consider the economic data shown on the next slide. After analyzing the statistics, graph, and other information, identify the economic enigma you think these data lead to. When asked by your teacher, share your economic enigma with the class.

Activity: Analyzing Enigmas Economic Enigma 3 Record the actual enigma (see below) in the appropriate place on Student Handout Why don’t more people carpool?

Activity: Analyzing Enigmas Economic Enigma 3 Step 2: On your handout, list any principles of the economic way of thinking that help explain this enigma. Principles of Economic Thinking Principle 1: Scarcity Forces Tradeoffs Principle 2: Costs Versus Benefits Principle 3: Thinking at the Margin Principle 4: Incentives Matter Principle 5: Trade Makes People Better Off Principle 6: Markets Coordinate Trade Principle 7: Future Consequences Count

Activity: Analyzing Enigmas Economic Enigma 3 Step 3: Choose the one principle that you believe best explains this enigma. On your handout, describe why.

Activity: Analyzing Enigmas Think back to your response for the Preview question: If you could make a small change in your daily routine that would save you time and money, would you make the change? Why or why not? How might your response have been different if you had applied the principles of economic thinking to this Preview question?

What Tools to Economists Use?

What Tools to Economists Use? Graphs: Two-dimensional representations of a three-dimensional world.

What Tools to Economists Use? Economic Models: Simplified Representations of Reality

Activity: The Power To Choose Consider your opinion on the following statement: Everyone should attend college. Then, go stand in the corner of the classroom that best represents your viewpoint. Strongly Agree Somewhat Agree Strongly Disagree Somewhat Disagree

Activity: The Power To Choose With the other students in your corner, briefly discuss your rationale. Then, one student from each group will share the group’s opinion. Strongly Agree Somewhat Agree Strongly Disagree Somewhat Disagree

Activity: The Power To Choose Read the handout entitled “The Power to Choose,” then be prepared to discuss the following questions: What reasons does Ryan Allis give for deciding to attend college? Do you think he made the right decision? Why or why not?

Activity: The Power To Choose Complete the Costs and Benefits of Going to College table on the back of the handout by filling in your preferences according to the instructions.

Activity: The Power To Choose After completing your cost-benefit table, be prepared to discuss the following questions: Was your score consistent with the decision you think you will make (or have already made) about attending college? Why might college be a better decision for some people than for others?

Now it is your turn. Choose one of these economic enigmas, or think of one that you have observed in your own life. Follow these steps to apply an economic way of thinking to help explain your enigma. List and explain any economic principles that help explain your enigma. Choose the one principle that you believe best explains your enigma. Explain why this principle provides the best explanation.

Choose an Enigma to Analyze Why do economy seats on airplanes cost different amounts? Why do people pay more for name-brand products when there are generic brands of the same product available for less? Why do police officers get paid so much less than professional baseball players? Why does a five-day Disneyland pass cost only 2.5 times what a one-day pass costs? OR Come up with your own.