How do you learn best: Listening, Speaking, Reading, Writing? What kind of assignments help you prepare best for tests?

Economics 101 Or how do we make decisions about stuff

In Economics, there are 4 basic questions: What to produce How to produce it How much to produce Who gets what is produced

Sound boring?

Here’s an Idea… Let’s get a friend to help us along

Scarcity When we have limited resources, We must make decisions. These limited resources lead to scarcity, not enough to go around.

What to Produce? I think I will make Chicken Fingers, French Fries, Lemonade and Special, spicy, secret sauce. Question #1

How to Produce it It needs to be produced on site, battered and deep fried, always fresh, never frozen! Question #2

Who to produce it for Well, LSU Students, oh and football fans, and families and just about anyone who loves fresh, fast, never frozen food! Question #3

How Much to Produce Just enough to have a fresh meal for everyone who comes to Raising Cane’s without having to throw anything away (or be forced to use, pardon me for the language, FROZEN CHICKEN!) Question #4

How would you answer these 4 questions if YOU opened a business? Just think of an idea and give it a shot! Show how YOU would answer the 4 basic economic questions. My plan only earned my owner a C- in school… but it earned him millions!

How are the 4 questions answered in each of these economies? Market Economy Command Economy Traditional Economy Yeah, How will I sell chicken fingers in THESE economies?

How are the 4 questions answered in each of these economies? Market Economy Command Economy Traditional Economy Yeah, How will I sell chicken fingers in THESE economies?

Command System Communist governments use this system. Government officials decide how to answer the four questions of economics. Advantage: Very Efficient, Able to change direction quickly. Disadvantage: Consumers do not get what they want, Only consumer’s basic needs are met. I don’t want Bobby Jindal or Barack Obama telling me what to do! I know best how to sell chicken fingers!

Traditional System Underdeveloped nations may follow this system. The four questions are answered by custom or tradition. Jobs handed down from father to son. Advantages: Everyone knows his or her role in the economy. Disadvantages: New ideas are discouraged. I want to do more than just swap Chicken Fingers for Boudin Balls with my Tailgating friends like I always have. I want to make money!

Market System The United States and most of the western world operate this way. Also called the free enterprise or capitalist system People own property, operate businesses, and make key decisions about the four questions of economics. Advantages: Consumers have a wide variety of goods and services. Freedom allows for economic growth. Disadvantages: Those too old, young or weak are left behind. I Like this!! I can make a lot of money in a Market System!

Making Choices Trade Offs: Because there are not enough resources to satisfy all of our needs and wants, we have to make choices or “trade offs.” I make choices all the time… There are some big ones coming up soon!

Making Choices Opportunity Cost = is the most valuable alternative you give up when making a decision. (2 nd choice) The Opportunity Cost of going to the LSU game is giving up going to the dance. What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Market System AdvantagesDisadvantages Command System Very Efficient, Able to change direction quickly. Consumers do not get what they want, Only consumer’s basic needs are met. Traditional System Everyone knows his or her role in the economy. New ideas are discouraged. Market System Consumers have a wide variety of goods and services. Freedom allows for economic growth. Those too old, young or weak are left behind.

Pop Quiz In this country, businesses and households make the decisions determining what goods will be produced and how, where, when, and for whom specific goods will be produced. Which label best describes this economic system? a.traditional system c. barter system b.market system d.command system What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Pop Quiz People can decide whether or not to purchase a private good or service. How is a public good or service different from a private one? a.A public good or service requires a large number of people to cooperate to make a purchase. b.A public good or service does not cost anything to provide. c.A public good or service is available for purchase if people can pay the cost d. A public good or service is provided by the government to people whether as individuals they use it or not. What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Pop Quiz Julia has $50 to spend on clothes for the dance. Suppose Julia decides to purchase a dress for the dance instead of buying new shoes. Which of these would be the opportunity cost of her purchase? a.Buying a new dress b.$50 c.Not having new shoes for the dance. D. Going to the dance What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Pop Quiz Deciding to go to a ballgame rather than do your homework is an example of a (n) a.production possibility b.marginal cost c.trade-off d.expense What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Pop Quiz A person who makes goods or provides services is called a a.consumerc.provider b.customerd.producer What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Pop Quiz According to the law of demand, what happens when prices go down? a.Demand increases b.Demand does not change c.Demand decreases What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?

Pop Quiz According to the law of supply, when prices increase a.demand increases b.supply decreases c.supply increases d.supply remains the same What are we going to do on Halloween? LSU game? Trick or Treat? Go to a Dance?