Foundations of Economics Economics Unit 1 Foundations of Economics

Essential Question? How do countries, societies and individuals determine how to best utilize their available resources?

Essential Terms Natural Resources Scarcity Human Resources Resources Capital Resources Entrepreneurs Goods Services Consumers Utility Adam Smith “The Invisible Hand” Scarcity Resources Wants Needs Maslow’s Hierarchy of Needs 3 basic economic questions Factors of Production Value

What is economics? Is the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources. Economics is governed by the Scarcity of available resources…Basically all resources are limited, whether they are natural or human resources. Scarcity is associated with value.

Scarcity cont.. 50% of all the earths original forest is gone, and only 22% of the “old growth” remains. That is about a football field per person on earth.

Scarcity cont.. Water Scarcity 75% of the Earth is covered with by water but only a small percentage is fresh water. 70% of fresh water is for irrigation.

Scarcity and value List five resources or items that are scarce and thus have value. Remember that certain items or resources may or may not be scarce in different parts of the world and thus may not have value. Below each resource write down your rational why it has value

Needs Vs Wants Wants- Is a way of expressing that need. Need- a basic requirement for survival. Maslow’s Hierarchy of Needs Wants- Is a way of expressing that need.

Apart from the basic needs explained by Maslow, what other needs does our American society dictate we should have and are they really needs? Write down examples and your rationale “reason” of why it meets the definition of a need. Ex. Car? It is a need because you need to get to work, school and basically because we don’t have an adequate public transportation system in Oregon. Ex.

Do needs become wants? Ex.

This!!!! VS. This!!!

3 Basic Economic Questions.. Given limited resources “scarcity” and our unlimited needs and wants we need to make decisions about how those resources will be used. Each country, state and city determines. What to Produce How to Produce For Whom to Produce What is an example of something Hillsboro needs? How would you apply the 3 basic economic questions to that need/want?

Factors of Production Natural Resources- land, livestock, water, forests etc… Capital Resources: -Capital goods: all the hardware used in the production of goods and services. -Financial capital: The money used to buy the capital goods Human Resource: The people with all the abilities and skills required to produce goods and services. -Intellectual “white collar” -Manual “blue collar” Entrepreneurs: Risk takers in search of profits. Ex. Dre,

Mr. Chavez’s yummy Tortillas Natural Capital Flour or Maize Stove Water Pin Roller Salt Comal Human Entrepreneurs Mom “intellect” Mr. Chavez Tias Sisters

Your group example.. Each group has to create a small business On the piece of butcher paper list the factors of production that will into your good or service. One person in your group will present your work to the rest of the class. Please write down your example in your book as it will be useful on a future quiz.

Goods Vs Services Service Goods Are products that you can physically use. Ex. TV’s, Toothpaste, clothing etc. Is something that is provided or performed for consumers. Ex. Electricity, Wi-Fi, haircuts etc…

Utility- How useful that good or service is Utility- How useful that good or service is. It also varies from consumer to consumer. Ex. IPAD- Maybe very useful to one person but not to another. Value- must be scarce and have utility. It also varies from consumer to consumer. Ex. Diamonds are scarce and have utility Ex. Jordans IV in the box.

Gordon Gekko: Wall Street clip Do you agree or disagree that greed is good? Write down your rationale in your note book. https://www.youtube.com/watch?v=VVxYOQS6ggk

Adam Smith and the Invisible hand Wrote The Wealth of Nations and coined the term Laissez-Faire, meaning minimal government intervention in economic affairs. Invisible Hand- By pursuing your own interest you promote society