Economics Chapter One Objective: Explain why limited resources force people into making decisions about their wants and needs

Bell Ringer List 4 items you need to survive on a daily basis List 4 items you WANT Give them a value… the value can be a daily, monthly, etc..

BILTMORE… owned by George Vanderbilt 3 people lived here We all want MORE, MORE, MORE Maybe not this much but we want more

Scarcity-- Not enough resources to produce ALL THAT WE WANT

Economics How we try to satisfy our wants by watching how we use limited resources What is a NEED??? What is a WANT? Who decides what to produce? How to produce? Who will receive the goods has a lot to do with the cost and scarcity? The more scare the good the more expensive the item.

Factors of production LAND Fixed Limited Could be the land the company is sitting on …. the land the crops are grown on ….. the coal mined …..the water Capital Money Tools to make a product $$$$$$ to buy

FACTORS OF PRODUCTION LABOR WORK EFFORT TO PRODUCE GOODS Entrepreneur ??????

ECONOMICS::::GDPGDP GDP: DOLLAR VALUE OF ALL GOODS PRODUCED IN A COUNTRY Jobs Taxes Prices

Who was the entrepreneur for the following companies? Winn Dixie Vera Bradley Walmart Russell Sportswear SaltLife Mitchell Drugs Belle Bouquet Trax Tires Saraland Produce Something Special Deli AFLAC Mercedes-Benz Mayfield Icecream Under Armour

Section 2 You are a valuable part of this economy You are a consumer What goods do you CONSUME???? The goods you can touch List 5 These are CONSUMER GOODS… intended for your use

Capital Goods The computer on my desk is used to produce

Durable Goods A good that last longer than 3 years

Non-durable good A good that last less than 3 years

Good----Services Usually ---Not something you can see or hold when you get to the house

The VALUE of a good… Determined by the scarcity of the good If you are out of gas on the side of the interstate and a service will bring you gas for $6.00 a gallon…Is it worth it???

Paradox of Value Things that are necessary.. GOTTA HAVE IT!!!! Have little monetary value While items of little use have high value CRAZY HUH?!

UTILITY Value has little to do with UTILITY The question is HOW much satisfaction does owning the good bring to you the consumer??? The more satisfaction you get from owning the product the more the seller can charge for the good. The more value you place on a good when you desire to sell it…the higher the price you will accept

VALUE MONETARY VALUE TO HAVE A HIGH MONETARY VALUE IT IS USUALLY USEFUL AND SCARCE

WEALTH Goods are counted as wealth Services are not listed or considered as wealth you are holding.. You must be able to reach out and touch the wealth.. This man is not wealthy because he holds the skill to be a doctor…he would be wealthy because of the goods his jobs has allowed him to purchase

ECONOMIC FLOW These guys spend money when they get paid WHERE PRODUCERS SELL THEIR GOODS WHERE YOU SELL YOUR LABOR OR LAND IS SOLD FOR RENT

ECONOMIC GROWTH THE MORE GOODS BEING PRODUCED THE MORE MONEY BEING MADE???? PRODUCTIVITY How efficient is production? How much can be produced in a given time:: Great Example: cotton gin Price of cotton went down significantly after the ginning machine cut the time down Less need for human labor increases productivity HUMAN CAPITAL People’s skills, knowledge To increase knowledge increase the value of human capital When a business trains you for a new job they are investing in your capital

ECONOMIC GROWTH DIVISION OF TASK Rather than a job being completed by one person the task of a job will be divided One will specialize in a particular part of production Specialization: The individual becomes more efficient in that task ASSEMBLY LINE

Section 3 Adam Smith::: Supported laissez-faire — LET IT BE GOVERNMENT!!!!

Trade offs If you trade the next four years of work for college will there be a benefit???? You weigh the trade offs every time you make a decision… The values you give opportunities or goods help you make decisions.

OPPORTUNITY COST You came home from the mall with a small bag What is in it????? WHAT ELSE DID YOU HAVE AN OPPORTUNITY TO BUY AT THAT TIME PHONE OR CLOTHES WHAT ELSE DID YOU HAVE AN OPPORTUNITY TO DO AT THAT TIME COLLEGE OR WORK

PRODUCTION POSSIBILITIES CURVE The economy does not have enough factors of production to produce output beyond the frontier. If producing within the frontier, the factors of production are being used inefficiently, and there is potential to produce more output.output

Production possibilities curve

PRODUCTION POSSIBILITIES CURVE A production possibilities curve illustrates:? A. scarcity. B. market prices. C. consumer preferences. D. the distribution of income.

COST BENEFIT ANALYSIS Does the benefit warrant the cost? Working out at gym for 4 hours …… OR.. Studying for 4 hours

FREE ENTERPRISE ECONOMY

FREE ENTERPRISE BUSINESSES AND CONSUMERS DECIDE WHAT WILL BE PRODUCED AND WHO THOSE GOODS WILL BE PRODUCED FOR NOT GOVERNMENT

STANDARD OF LIVING When prices drop for goods then people can enjoy the pleasure of buying Their standard of living goes up. During the Roaring 20s we boasted of such a great Standard of Living in US then…….The Great Depression