Warm Up 1/10/2013 Write a sentence that correctly uses the key words wants and scarcity.

The Economic Way of Thinking

Warm Up 1/11/2013 Dry Erase Markers Whiteboards Erasers

_______________ is the situation that exists because wants are unlimited and resources are limited. Scarcity

_________________ is the study of how people use scarce resources to satisfy wants Economics

Principle 2: Scarcity Affects Everyone – Scarcity affects which _________ and ___________are provided Goods and Services

Scarcity Leads to Three Economic Questions Question 1: What Will Be Produced? – It all depends on ________________ – A country’s resources, government, or people’s choices

Question 2: How Will It Be Produced? – Decisions on production methods involve using resources efficiently – Societies adopt different approaches with unskilled labor force, might use labor-intensive methods with skilled labor force, might use capital-intensive methods

Question 3: For Whom Will It Be Produced? – How goods and services are distributed involves two questions how should each person’s share be determined? how will goods and services be delivered to people? CountryBarrels/day 1Saudi Arabia10,520,000 2Russia10,270,000 3United States9,688,000 4Iran4,252,000 5China4,073,000

Which of the top oil producing countries consumes the most? U.S., roughly 20 million barrels/day

The Factors of Production Factor 1: __________ – means all natural resources on or under the ground includes water, forests, wildlife, mineral deposits LAND

The Factors of Production Factor 2: ____________is all the human time, effort, talent used to make products LABOR

The Factors of Production Factor 3: ______________ – is a producer’s physical resources includes tools, machines, offices, stores, roads, vehicles CAPITAL

The Factors of Production Factor 4: ____________ – vision, skill, ingenuity, willingness to take risks – anticipate consumer wants, satisfy these in new ways Entrepreneurship

Let’s Review the Homework 1.Relationship between key terms a)Wants / Scarcity (Yesterday’s warm up) b)Producers make goods that consumers can choose to buy. c)One of the four factors of production includes entrepreneurship which provides a firm with vision and ingenuity. 2.A need is something necessary for survival while a want is a desire that can be satisfied by consuming a good or service. We need food for survival but we can also want different types of food that isn’t absolutely necessary to live.

3.Scarcity affects how much a producer can afford to produce and how much a consumer can consume. 4.Cell Phone, Data Plan, Education, BART, Muni, etc 5.Computer Repair Store 1.Land- Copper and nickel 2.Labor- Technicians and cashiers 3.Capital- computers, tools, money, office, phone 4.Entrepreneurship- CEO that funds the place, takes care of advertising, finds new ways to bring in customers

Story of the squirrels II only love 2 things in this world- lady squirrels and nuts.

Too many squirrels!

Not enough nuts Last one

Not to worry

But lady squirrel poses a problem… Give me half of your nuts and I’ll be your girlfriend.

Opportunity will cost you… Don’t leave me!

In your notebook… What are the squirrel’s 2 favorite things in the world? What problem did the squirrel face? What were the squirrel’s options?

Implications of Scarcity There are costs to EVERY choice we make We cannot have everything

Opportunity Cost The value of the next best alternative given up to get something else that you want

You have a final to study for. Unfortunately, the night before your exam, your significant other wants to see a movie. What will you do? 1.Make a choice 2.Describe the price and opportunity cost of your choice