+ WORDS OF THE DAY: DEFINE THESE TERMS Economy Economics Positive economics Normative economics Goods/services When you finish the WOD’s, complete the Anticipation Guide— left side ONLY.

+ The 7 Principles of Economic Thinking Essential Questions: How do economists explain their world? Why can’t you always get what you want?

+ WORDS OF THE DAY: DEFINE THESE TERMS Scarcity Choice* (use your device/dictionary) Tradeoff Incentive Cost-Benefit Analysis

+ The 7 Principles of Economic Thinking 1. Scarcity Forces Trade-offs 2. Cost vs. Benefits 3. Thinking At the Margin 4. People Respond to Incentives 5. Trade Makes People Better Off 6. Markets Coordinate to Trade 7. Future Consequences Count

PRINCIPLE #1 Scarcity Forces Tradeoffs … but Resources are Limited People have Unlimited Wants… Land Soil Minerals Fuels People Money Technology Food Clothing Shelter Schools Hospitals Cars Transportation

+ Scarcity Forces Tradeoffs m/watch?v=yReZ4xdg5 bw

Scarcity Forces Tradeoffs

PRINCIPLE #2 Costs vs. Benefits

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+ PRINCIPLE #3 Thinking at the Margin “Thinking at the Margin” = What is the benefit of adding ONE more? T-shirts on sale for $10 each – at a certain point adding ONE more t-shirt is not worth it anymore.

+ Thinking at the Margin 1:15

PRINCIPLE #4 People Respond to Incentives -Incentives – anything to change peoples’ behavior. (sale, detention) Incentives can be … MOTIVATINGDETERRING

People Respond to Incentives Incentives Video: st=PLAC DAE0883

+ PRINCIPLE #5 Trade Makes People Better Off In most economies, trade is VOLUNTARY. Parties only trade if believe it is in best interest. McDonald’s wants your money, you want their food – trade helps you both.—it’s a “win, win”

+ Trade Makes People Better Off ​

+ PRINCIPLE #6 Markets Coordinate to Trade Parties that trade want to make it as simple as possible. Examples: Many stores in one location at a mall Many brands of food sold in the same grocery store.

+ Markets Coordinate to Trade ch?v=h7oq26R6Kak ch?v=h7oq26R6Kak

+ PRINCIPLE #7 Future Consequences Count Economists always think about the future This is the “…it depends…” “If we raise taxes, what will be the effect?”

+ PRINCIPLE #7 Future Consequences Count Future Consequences Count video: atch?v=F3H1_hJfmwA

+ Apply the 7 Economic Principles Get out your “Economic Warm-up” from last block. Look over each question and your responses. In the column to the left of the right, identify which of the 7 Economic Principles you applied to your decision. Be prepared to explain.

+ Cost vs. Benefits Analysis Find a 2-3 partners (groups should have 3-4) Using the choice provided on your poster, you will complete the following tasks: 1. Identify the resources necessary to complete/achieve the assigned choice. Write these on Post-its and put them directly under the choice. 2. Analyze the costs and benefits of that choice, using one color of Post-its for costs and another for benefits. Put the costs on the left side and the benefits on the right. 3. Write your choice on a Post-it and place that at the bottom. Be prepared to justify and explain your choice.