Economics y10 Chp Chp Textbook

What is economics about?  Do you remember the first lessons?  Economics is about l______ r_____ versus U___________ wants. Chp Textbook

Managing Scarce Resources  The Problem Scarcity = Limited… versus unlimited wants versus unlimited wants Chp Textbook

Explain the image below..  Chp Textbook

Economic Problem.. Chp Textbook

 What to produce?  How to produce?  For whom to produce? This is known as the Economic Problem! This leads to CHOICE Chp Textbook Extension: Read top p.43 and write down a sentence for each.

Economic Problem Activity  Can you illustrate ‘The Economic Problem’ by Linking key economic terms together?  Include ‘opportunity cost’. What does this important economic term mean? Chp Textbook

Draw and explain in Exercise Book Chp Textbook

You watched this video?  Gangnam Style overload Gangnam Style overload Gangnam Style overload  GUESS:  How many Youtube hits did this video get?  What could’ve been done instead of everyone watching this video? Chp Textbook

We could’ve built 5 of these… Chp Textbook

Answer  2 billion hits!  =  = At 4:12 minutes, that equates to more than 140m hours   16,000 years. Chp Textbook

The Cost of Gangnam style What other achievements were forgone in the time spent watching a sideways shuffle and air lasso? It took 50m man-hours to complete the “supercarrier” USS Gerald Ford last year. Had people not been watching PSY—the South Korean pop star who released the song in July 2012—they could have constructed three such ships. Chp Textbook

Opportunity Cost “The cost of choice in terms of losing the benefit of the next best alternative. I chose to watch Gangnam style along with 2 billion other people, in choosing this option the 2 billion people have sacrificed an alternative activity for example, building skyscrapers. Chp Textbook

Examples of opportunity cost  When people make a choice they must make a sacrifice. i.e, they must chose one thing and not another.  You must decide to spend money on food or goods.  Family must decide to go on holiday or buy new car  Government must decide to build new roads or schools instead? Chp Textbook

Opportunity cost  Weighing up your decisions  College Student's Opportunity Cost College Student's Opportunity Cost College Student's Opportunity Cost  Would you choose a date over revision?  Which choice has lower opportunity cost? Chp Textbook

I recently bought a pair of shoes which cost me £40

I Could’ve bought…

Opportunity Cost  The TRUE Cost of something  I can’t have everything I want.  Have to make a CHOICE  In buying shoes I have sacrificed the next best alternative (CDs)

Opportunity Cost  THE BENEFIT FROM THE NEXT BEST ALTERNATIVE IS LOST. The shoes didn’t cost £40, the real cost was…. The opportunity cost….

Opportunity Cost Explain with an example how opportunity cost is central to the choices we or our family make.  E.g. I decided to have a pizza today, therefore forgoing the option of a sandwich instead. Therefore, the opportunity cost of the pizza was the sandwich I sacrificed instead. Chp Textbook

Which patients to treat?  You’re a hospital manager and must make tough decisions.. Chp Textbook

Opportunity Cost  The cost of c_____ in terms of losing the b______ of the next best a________.  Explain to your partner then your teacher how the Hospital Manager Task illustrates this problem. Chp Textbook

Can you define / explain  Economics  Economic Problem  Scarcity  Choice  Opportunity Cost Chp Textbook

PPC  Define  Production Possibility Curve  The maximum quantities of different combinations of output of two products, given current resources and technology. Chp Textbook

Production Possibility  Choice in the National Economy Guns Butter Chp Textbook I can choose to produce ALL guns or ALL butter. Or ideally, somewhere in between.

Units of Meat Pies (millions) Units of Baseball Caps (millions) A production possibility curve Units of BC Units of MP Units of BC Units of MP a 8m 0.0 7m 2.2m 7m 2.2m 6m 4.0m 6m 4.0m 5m 5.0m 5m 5.0m 4m 5.6m 4m 5.6m 3m 6.0m 3m 6.0m 2m 6.4m 2m 6.4m 1m 6.7m 1m 6.7m 0 7.0m 0 7.0m a

Units of BC Units of MP 8m 0.0 8m 0.0 b 7m 2.2m b 7m 2.2m 6m 4.0m 6m 4.0m 5m 5.0m 5m 5.0m 4m 5.6m 4m 5.6m 3m 6.0m 3m 6.0m 2m 6.4m 2m 6.4m 1m 6.7m 1m 6.7m 0 7.0m 0 7.0m b A production possibility curve Units of Baseball Caps (millions) Units of Meat Pies (millions)

Units of BC Units of MP 8m 0.0 8m 0.0 7m 2.2m 7m 2.2m c 6m 4.0m c 6m 4.0m 5m 5.0m 5m 5.0m 4m 5.6m 4m 5.6m 3m 6.0m 3m 6.0m 2m 6.4m 2m 6.4m 1m 6.7m 1m 6.7m 0 7.0m 0 7.0m c A production possibility curve Units of Baseball Caps (millions) Units of Meat Pies (millions)

Units of BC Units of MP 8m 0.0 8m 0.0 7m 2.2m 7m 2.2m 6m 4.0m 6m 4.0m d 5m 5.0m d 5m 5.0m 4m 5.6m 4m 5.6m 3m 6.0m 3m 6.0m 2m 6.4m 2m 6.4m 1m 6.7m 1m 6.7m 0 7.0m 0 7.0m d A production possibility curve Units of Baseball Caps (millions) Units of Meat Pies (millions)

Units of BC Units of MP 8m 0.0 8m 0.0 7m 2.2m 7m 2.2m 6m 4.0m 6m 4.0m 5m 5.0m 5m 5.0m 4m 5.6m 4m 5.6m 3m 6.0m 3m 6.0m 2m 6.4m 2m 6.4m 1m 6.7m 1m 6.7m 0 7.0m 0 7.0m A production possibility curve Units of Baseball Caps (millions) Units of Meat Pies (millions)

6.Production Possibility Boundary or Frontier or Curve  The production possibility curve what the curve shows what the curve shows Unobtainable production – production outside the curveUnobtainable production – production outside the curve

x A production possibility curve Units of Meat Pies (millions) Units of Baseball Caps (millions)

x w A production possibility curve Units of Meat Pies (millions) Units of Baseball Caps (millions)

6.Production Possibility Boundary or Frontier or Curve  The production possibility curve what the curve shows what the curve shows Unobtainable production – production outside the curveUnobtainable production – production outside the curve Increasing opportunity costsIncreasing opportunity costs

x A production possibility curve Units of Meat Pies (millions) Units of Baseball Caps (millions)

x y 1 1 A production possibility curve Units of Meat Pies (millions) Units of Baseball Caps (millions)

x y z A production possibility curve Units of Meat Pies (millions) Units of Baseball Caps (millions)

6.Production Possibility Boundary or Frontier or Curve  The production possibility curve what the curve shows what the curve shows Unobtainable production – production outside the curveUnobtainable production – production outside the curve Increasing opportunity costsIncreasing opportunity costs Unemployed resources – production inside the curveUnemployed resources – production inside the curve

v A production possibility curve O Units of Meat Pies (millions) Units of Baseball Caps (millions)

Shifting out the PPF

Now O Growth in potential output Units of Meat Pies (millions) Units of Baseball Caps (millions)

Now O Growth in potential output Units of Meat Pies (millions) Units of Baseball Caps (millions)

Now 5 years’ time O Growth in potential output Units of Meat Pies (millions) Units of Baseball Caps (millions)

Shifting out the PPF

Outward shift of PPC  Two Reasons;  Economic Growth Change in productive potential of an economy Change in productive potential of an economy  Technological Change Improvements in technology Improvements in technology Chp Textbook

What’s the difference?  Engine v Food.. Chp Textbook

Capital v Consumer goods Chp Textbook

Capital v Consumer Goods  Capital goods tend to be machines and other man made equipment. They can be used over and ____ again (e.g. car trips) and some can even make consumer g_______ (e.g. cooker)  Consumer goods on other hand are are n________ made or can only be used ______. They are consumed and must be re-p________. Chp Textbook

Which is which Chp Textbook Car – Capital Carrots – Consumer Fish Fishing Net Water bottle Water pump Stapler Staples Ladder Wheat Chicken shwarma BBQ

Draw and Explain Movements and Shifts Capital Goods Consumption Goods Shift Movement ● ● ● A B C ● ● D E Chp Textbook

PPC Activity  Read p  Complete Activity on p.45 Chp Textbook

Can you define ?  The Economic Problem ?  Choice  Needs  Opportunity Cost  Scarcity  Production Possibility Curves Chp Textbook