Warm Up The following photo best explains a. Capital goods b. Paradox of Value c. Consumer goods d. Scarcity

Current Event…..

Factors of Production Factors of Production are the resources (limited) used to create all goods and services. LAND LABOR CAPITAL ENTREPRENEUR

Factors of Production LAND LABOR CAPITAL ENTREPRENEUR Goods/Services Human Capital Capital Goods Goods/Services

Task…. Create your own scenario showing the factors of production working together to produce a good or service. Land- How much? Labor - How many? Capital - List what is needed? Entrepreneur

Trade - Offs Trade-Offs - all the alternatives we give up whenever we choose one course of action over another. Example: I choose to play video games instead of studying, working out, sleeping, texting….etc. I give up all these things to play video games.

Opportunity Costs Opportunity Cost - The most desirable alternative given up as a result of a decision made. Example: I choose to play video games but my second choice would be to sleep. My opportunity cost is sleeping.

Decision Making Grid Sleeping In Wake up early to study Benefits Opportunity Cost Benefits forgone

Decision making at the Margin Thinking at the Margin involves making decisions by breaking them up into “units of measurement” and using this to make a decision. Example: Options Benefit Opportunity Cost 1st hour of extra study time Grade of C on test One hour of sleep 2nd hour of extra study time Grade of B on test 2 hours of sleep 3rd hour of extra study time Grade of A on a test 3 hours of sleep

Warm Up For something to be valuable it must be ________ and have _______. TEST #1 A Day - Friday 9/12 B Day - Monday 9/15

3 Basic Economic Questions 1. What to produce? 2. How to produce it? 3. For whom to produce it?

Production Possibilities Graph A Production Possibilities Graph shows alternative ways to use an economy’s resources. You can compare goods and services to each other. Example: comparing the production of cell phones to the production of cars.

20 (Millions of tons) No Shoes, all possibilities apples 10 5 No apples, all possibilities shoes 5 10 20 (Millions of pairs)

Production Possibilities Graph Step 1 Shoes Apples 15 8 14 12 18 9 20 5 21

Production Possibilities Frontier 20 (Millions of tons) 14, 8 No Shoes, all possibilities apples 12,14 10 OPPORTUNITY COSTS 9, 18 5, 20 5 No apples, all possibilities shoes 5 10 20 (Millions of pairs)

Create a Production Possibilities Graph Guns (x axis) Butter (y axis) 19 9 16 14 15 8 17 5 21

Efficiency & Underutilization Efficiency - using resources in such away as to maximize the production or output of goods and services Underutilization - using fewer resources than the economy is capable of using.

Growth - Increase in any factor or factors of production. Example: Increase in factories built or an increase in laborers.