Unit I – Scarcity & Choices

Provide an example of a good.

Provide an example of a service.

Explain the difference between a good and a service.

Good Good – Physical objects – Objects that are tangible Service Service – Actions or activities that one person performs for another

List the 3 Factors of Production.

Land Land Labor Labor Capital Capital – Physical Capital – Human Capital

Understand the differences between the 3 Factors.

Land Natural resources that are used to make goods and services

Labor The effort that people devote to a task for which they are paid

Capital Any human-made resource that is used to create other goods and services

Understand the difference between physical and human capital.

Physical Capital Physical Capital – Machines, tools, and buildings that are used to produce other goods and services Human Capital Human Capital – Skills and knowledge gained by a worker through education and experience

“Human capital is as much a part of the wealth of nations as factories, machinery, and other physical capital.” Economist - Gary Becker

Support your opinion on which is more important to a nation’s economy, physical or human capital.

Explain how a business would use the 3 Factors of Production to make a product.

Identify and explain the importance of at least 3 personal characteristics common to successful entrepreneurs.

Evaluate the importance of entrepreneurs in our society.

Discuss the “Economizing Problem” that causes scarcity.

UNLIMITED WANTS LIMITED RESOURCES “We have UNLIMITED WANTS, but LIMITED RESOURCES.” This causes the scarcity of everything.

Explain situations in your life that involved opportunity costs and be able to identify and explain why they are your opportunity costs.

Opportunity Cost Opportunity Cost – The most desirable alternative given up when a making a decision.

Explain the economic reasoning behind a making a choice.

benefits costs benefit-cost analysis Whenever people decide whether the benefits of a particular action are likely to outweigh its costs, they engage in a form of benefit-cost analysis.... Benefit > Cost Benefit > Cost – Do It!!! Benefit < Cost Benefit < Cost – Don’t Do It!!!

Explain what an incentive is.

A reason for doing something Freakonomics 3 types from Freakonomics Moral Moral – one acts out of conscience or conviction Social Social – actions are related to shame Economic Economic – people act in their financial interest.

Provide examples of how incentives affect people’s decisions.

Construct a correctly labeled a PPC curve.

Consumer Goods Capital Goods

Illustrate where a society is operating efficiently in regards to the PPC curve.

Consumer Goods Capital Goods

Illustrate where a society is underutilizing its resources in regards to the PPC curve.

Consumer Goods Capital Goods

Illustrate where a society is operating at an unsustainable level in the short run in regards to the PPC curve.

Consumer Goods Capital Goods

Identify 3 reasons why a PPC curve may shift.

Quantity of Resources Change in Quantity of Resources Available – Increase in Quantity; Curve shifts to the Right Quality of Resources Change in Quality of Resources Available – Increase in Quality; Curve shifts to the Right Technology Change in Technology – Increase in Technology; Curve shifts to the Right

Consumer Goods Capital Goods