Daily Warm up Activity Please write on a piece of notebook paper to share and ultimately turn in. Write a detailed and well formulated argumentative ½ page quick write (with specific supporting examples) on the following topic:  The U.S. Government is too involved in our economy.  The U.S. is not involved enough in our economy.

Unit One: Learning Objectives: North Clackamas School District Social Studies Priority Standards: Econ 53. Describe characteristics of command, market, traditional, and mixed economies and how they affect jobs and standards of living. Econ 59. Demonstrate the skills and dispositions needed to be a critical consumer of information.

Lesson Two: Daily Learning Target I Can define and explain in writing: Kirby’s Kickin Six Economic Reasoning Principles They’re good?

We will be using Cornell Note Taking Format Today!

ECONOMIC REASONING PRINCIPLES (AKA “ERPS”)

How Do We Define Economics? The study of how people seek to satisfy their wants and needs by making choices (when limited resources are available) Resources : human, natural, capital, and entrepreneurial. These productive resources are used to create the goods and services people want. Why must we make choices? Resources are scarce : wants exceed limited resources *This is the basic economic problem* Allocation: We decide who gets it? (“Guns vs. Butter”)

Scarcity How then are these UNLIMITED wants satisfied by LIMITED resources? A Price Must Be Paid…EVERYTHING HAS A PRICE!!!!! This is how it is decided who receives the resources that they want Which brings us to our next point…

TANSTAA“F”L There Ain’t No Such Thing As A “FREE” Lunch NOTHING ON THIS EARTH IS FREE!!!!! EVERYTHING HAS A PRICE…IN THE EYES OF AN ECONOMIST!

From 3!

KIRBY’S ECONOMIC REASONING PRINCIPLES People choose, and individual choices are the source of social outcomes.(#1) IS

Why do people have to make a choice? Scarcity forces us to choose Unlimited wants > limited resources Not making a choice is itself a choice Based on perceptions of expected costs and benefits of alternatives Factors driving choices can be material, behavioral, moral, or some combination of all three.

WHY ARE YOU IN THIS CLASS RIGHT NOW? Application of Opportunity Costs Cost / Benefit Analysis It’s the best of your alternatives Your decision might change if………

Trade-Offs Trade Offs: What is given up whenever a course of action is chosen over another All Individuals, Businesses, Governments, and Large Groups of People face Trade- offs (“Guns or Butter”)

KIRBY’S KICKIN SIX ECONOMIC REASONING PRINCIPLES ALL CHOICES INVOLVE COSTS (#2) people receive benefits and incur costs when they make decisions.

Opportunity Cost The cost of a choice is the value of the next-best alternative foregone, measurable in time or money; NOT NECESSARILY A MONETARY VALUE It is not what “could” you do, but what “would” you do Every decision/choice has an opportunity cost…no matter what!

Opportunity Cost Analysis Alternatives:Should I get a job? Should I participate in sport? Perceived Benefits Choice Opp. Cost Benefits Refused Decision Maker: YOU

Would you pick these up if you approached this? What would be the opportunity cost of this decision?

Would you pick this up if you approached this? What is the incentive to pick up this as opposed to the pennies?

KIRBY’S KICKIN SIX ECONOMIC REASONING PRINCIPLES PEOPLE RESPOND TO INCENTIVES IN PREDICTABLE WAYS. (#3) Choices are influenced by incentives, the rewards that encourage and the punishments that discourage actions. When incentives change, behavior changes in predictable ways.

When incentives (Prices) change, behavior changes in predictable ways. When prices go up consumers demand a larger/smaller quantity?

KIRBY’S KICKIN SIX ECONOMIC REASONING PRINCIPLES Institutions are the “rules of the game” that influence choices. (#4)

What are the “rules of the game” (the accepted and expected forms of social interaction) in: Dating ?

Institutions Influence Choices Laws, customs, moral principles, superstitions, and cultural values influence people’s choices within an economic system What to Produce? How to Produce It? For Whom to Produce It?

Again: Why are some countries rich and others poor? Low, Middle and High Income

Can institutions change? Oh yes! About 30 years ago, China began legal changes designed to mimic those of capitalism Result: per capita income now > six times higher than it was About 30 years ago, Zimbabwe began undoing the capitalist institutions that had made it among richest in Africa Result: per capita income now roughly ninety percent lower than it was

The poverty of some nations and the wealth of others is not an accident; it is the result of choices

KIRBY’S KICKIN SIX ECONOMIC REASONING PRINCIPLES VOLUNTARY TRADE CREATES WEALTH (#5) I

VOLUNTARY TRADE CREATES WEALTH: Trying to produce everything yourself limits both production and consumption What do you “do best”? Sell what you produce Buy what you can’t

KIRBY’S KICKIN SIX ECONOMIC REASONING PRINCIPLES CONSEQUENCES OF OUR CHOICES LIE IN THE FUTURE (#6) ( I

Final Reflection Question Please write on the paper you wrote your quick write essay. Which principal do you agree with the most and which one can you least identify with? Please explain your answers for each in a well formulated paragraph.

Partner Practice: Econ Book Questions:  Read through pages (Socialism and Communism)  Answer Questions 3-10 on page 38