Today’s Agenda Warm-up Check signatures Scarcity Activity Notes  Factors of Production Chart HW – NOTEBOOK CHECK THURSDAY!

Economics – What is it?? Essential Questions: What is Economics? Why is Scarcity the basic economic problem?

Definition Economics is: Study of human efforts to satisfy unlimited wants What does this mean in your own words?

The Problem: The basic economic problem that ALL societies face is scarcity. Scarcity – result of not having enough resources to produce all the things people would want

Needs vs. Wants What is a need? Basic requirement for our survival Ex: Water, food, clothing, shelter What is a want? A way of expressing a need Ex: wish for, crave, desire

TINSTAAFL Is anything really “free”? TINSTAAFL = “There is NO such thing as a free lunch” Even if YOU are not paying, somebody paid for the production of it

Coupons – is this really free?

3 Questions of how to use limited resources. WHAT to produce? Society can’t have everything it wants, so it must decide what to produce Example – Should the U.S. worry about making more military weapons or more food/shelter to take care of the homeless?

3 Questions of how to use limited resources. HOW to produce? What method will be used to produce things? Should factory owners use more machinery and less workers or more workers and less machinery?

3 Questions of how to use limited resources. FOR WHOM to produce? Who will receive the existing items/supplies? Who is it allocated to?

Today’s Agenda 9/10 Warm-up Notebook Check Review Factors of Production Goods/Services Notes Vocab Activity

Goods Good An item that is economically useful (satisfies a want)

Goods Consumer Goods Intended for final use by individuals Examples: Ipods, Cell Phones What are some items around the class that would be consumer goods?

Goods Capital Goods Manufactured goods used to produce other goods and services Example: an oven in a bakery

Services Service Work that is performed for someone Ex. Barber What are some examples of a service we see in our everyday lives?

Values Value is a worth that can be expressed in dollars and cents. The PARADOX OF VALUE – When necessities have little value, and non- necessities have much higher value. The current price of gold is $993 per ounce The current price of water is $ 4.50 for 12 bottles

How is Value calculated? Value = Scarcity + Utility Scarcity means….. Utility - the ability to be useful or provide satisfaction How does gold, diamonds, and other jewels fit into the paradox of value?

Wealth Wealth is: The accumulation of products that are tangible, scarce, useful, and transferable. Wealth is the accumulation of many things that have VALUE Who do you consider to be wealthy?

Today’s Agenda Circular Flow of Economic Activity Chart Activity Critical Thinking Questions Project Assignment

Essential Questions How do consumers and businesses interact with each other in the economic flow of activity?

Circular Flow of Economic Activity ___________________ Markets Examples: ___________________ Markets Examples: BusinessesIndividuals __________ Income _________ Spending Income from ___________ Payments from _____________ Goods _________ Land _________ Labor _________ __Goods___ ________ Buy __________ _________

Businesses – the companies providing goods and services Individuals – the consumers (people, us) that want to buy/use the goods and services

Markets Product Market (top box)– where businesses sell their goods and services to consumers –Individuals spend their money in product markets and get goods and services –Businesses get INCOME from consumers buying goods and services

Product Markets BusinessesIndividuals Business Income Consumer Spending Income from ___________ Payments for Goods and Services Land _________ Labor _________ Goods and Services Buy __________ _________

Markets Factor Market (bottom box)- where productive resources are bought and sold -businesses hire labor for wages/salaries, get land, etc. -PAYMENTS for resources (Factors of Production) -Individuals get INCOME from working in factor markets

Product Markets Factor Markets BusinessesIndividuals Business Income Consumer Spending Income from Working/r esources Payments for Resources Goods and Services Land Capital Labor Entrepre neurs Goods and Services Buy Producti ve Resourc es

Critical Thinking Question Answer the following question and hand in when completed –As a consumer, what role do you play in the circular flow of economic activity?