Life/Personal Choices

Consumer Choices  Consumers choose goods and services based on their needs and wants.  Goods: physical items  Services: actions and activities that one person does for another  Needs: something necessary for survival  Wants: something that is desirable, but not necessary for survival

Imagine Your Future...  It’s 2034—Wow, that happened fast!  You work as a cable installer for WOW!, not great money, but you do own the specially modified van you drive for work.  You have been married nearly 5 years... Happily  You and your spouse bought an older house a year ago!  You and your spouse are expecting a baby!  And you have $5,000. in savings and are planning a second honeymoon before the baby comes!  What could go wrong?

EVERYTHING  It’s the beginning of the winter, and the furnace repair person has some seriously bad news.  The transmission on your work van is starting to slip.  The baby came 3 months early  but wait, there’s more.  The relaxing second honeymoon never happened.  The nay-sayers won—“Obamacare” died years ago  Your credit is maxed out. It will be years before you will have enough in savings to do more that one of these things.  You, my friend, have some hard choices to make!

Do You...?  Replace the heating system, making certain your family doesn’t freeze to death  Get the transmission on the van fixed, allowing you to continue earning money to feed your family  Give your child the gift of sight before it’s too late  Go on the second honeymoon that you know will ensure your marriage remains a happy one  You have 5 minutes to decide what you will do. Prioritize your choices, writing them down from 1 to 4, with 1 being the most important and 4 being the least important. You may work with a partner if you wish.

What You Didn’t Choose  Trade Offs: all the alternatives we give up when we make a choice  Choices 2 – 4 on your list  Opportunity Cost: the one best alternative that we give up when we make a choice  Choice number 2

Governments Have Choices To Make, Too  What changes might happen to production within a country during times when national security is endangered?  The economic term that describes this concept is guns or butter  When a country increases its production of military goods: “ guns”, it must decrease its production of consumer goods: “butter” (it works the other way as well)  Why must we do this?

Consider This...  You are a finish carpenter and are just getting your own high-end carpentry business off the ground.  You are the only worker.  You have a small woodshop with just enough tools and machines for yourself.  You also have a small supply of exotic hardwoods from which to make your goods.  And a small panel van for deliveries and hauling lumber.  You love woodworking and there is only a little paperwork to do. You get to be creative and make things that people think are beautiful. You are a great finish carpenter!  All is going pretty well—for a new business—and then...

You Get A Phone Call  A local designer, working for a developer who is build up- scale condos in the riverfront area in Detroit, absolutely loves, loves, loves your work—and tells the developer all about it and you.  The developer wants you to produce all the custom woodwork for the condos: cabinets, fireplaces, bookcases, railings, etc.  You know, if you take this job, you will have only eighteen months to complete all the work, and it’s much more output than you can possibly handle within that timeframe.  If you do take this job, you could end up getting a lot more work from this developer and your business could really grow—but that’s no guarantee of future work.

Thinking At The Margin  During the process of making this decision, if you consider hiring one extra worker, or purchasing one more machine or load of lumber, you are thinking at the margin.  Thinking at the margin: deciding whether to do or use one additional unit of some resource  Making good business decisions involves comparing opportunity cost and benefit at the margin

You Have Some Thinking To Do  In groups of 2 and three, write down all the things you need to consider, so that you can make a wise decision for yourself and your business.  What will you need to do if you take the job (consider what your business is currently like)?  How will you have to change things in order to finish the job on time?  How might this decision effect the future of your business?  Consider both what will happen if you do take the job, and if you don’t take the job  How might this decision effect you personally in the future?  Consider both what will happen if you do take the job, and if you don’t take the job  Consider carefully and make a decision—either individually or by group. You will have 7 minutes to complete this task.

Let’s Take Another Look: Keep These Things In Mind  You are a finished carpenter and are just getting your own high-end carpentry business off the ground.  You are the only worker.  You have a small woodshop with just enough tools and machines for yourself.  You also have a small supply of exotic hardwoods from which to make your goods.  And a small panel van for deliveries and hauling lumber.  You love woodworking and there is only a little paperwork to do. You get to be creative and make things that people think are beautiful. You are a great finish carpenter!

What Would You Need To Change To Take The Job?  Hire employees  A bigger woodshop, with more machines, and maybe a bigger van as well  Increase the size of the lumber supply  You have to take care of all of the above

The 4 Factors Of Production  Employees  Also known as labor: the effort that a person devotes to a task for which that person is paid  Woodshop, machines, and van  All of these things are capital: any human-made resource that is used to produce other goods and services  These are also physical capital: all human-made goods used to produce other goods or services  There is also human capital: the skills and know-how of workers learned through formal education, training, and experience

The 4 Factors Of Production Continued  Lumber  Lumber is considered land: all natural resources used in the production of goods and services (farm land, coal, water, forests)  You  You are an entrepreneur: a person who combines land, labor, and capital to create new goods or services. They takes the risks; invent new products and services, and new ways of doing things; open new businesses; and create new industries. They make the choices, but reap the benefits as well.

On A Local Scale

On A Global Scale

On An Individual Scale Irena Sendlerowa  Saved nearly 2,500 Jewish children from the Warsaw Ghetto in Poland.  Was caught and tortured for information, then sentenced to death.  She never revealed any information to the Nazis and was rescued before her sentence was carried out.