1. Welcome

2. Class Expectations 1. No cell phones…do not use during class. I will take your phone away. 2. Respect yourself, your classmates, and me. 3. Participate…..ask questions, share thoughts and insight, debate each other 4. Do your homework and do it well. Homework is practice for the exam and assessments.

3. Unit 1 – Basic Economic Concepts Chapter 1 Objectives: Objectives: - For students to understand the basic economic problem. - - For students be able to make rational economic choices. - For students to be able to explain the factors of production. - For students to understand the Circular Flow Model

4. Topics to be discussed What is Economics What is Economics Basic Economics Question Basic Economics Question Circular Flow Circular Flow Inflation/Recession Inflation/Recession Opportunity Cost Opportunity Cost 3 Basic Questions 3 Basic Questions 4 Factors of Production 4 Factors of Production Micro and Macro Economics Micro and Macro Economics

5. What is Economics – Quiz Choose the correct answer Economics is the political science that deals with unemployment, inflation, taxes, business cycles, money, supply, and trade. Economics is the political science that deals with unemployment, inflation, taxes, business cycles, money, supply, and trade. Economics is the social science that studies money and banking Economics is the social science that studies money and banking Economics is the social science that examines the interaction of demand and supply Economics is the social science that examines the interaction of demand and supply Economics is the social science concerned with the problem of scarcity Economics is the social science concerned with the problem of scarcity

6. And the answer is… Economics is the social science concerned with the problem of scarcity. Economics is the social science concerned with the problem of scarcity.

7. Island Simulation

8. With your group members answer the following questions… THINGS TO CONSIDER THINGS TO CONSIDER 1. Do we know that there is no one else here? 1. Do we know that there is no one else here? 2. Do we know if we need protection here? 2. Do we know if we need protection here? 3. What do we have? 3. What do we have? 4. What do we need? 4. What do we need? 5. Who will be our leaders? 5. Who will be our leaders? 6. What should we do to get started? 6. What should we do to get started? 7. What should we do in the first 24 hours? 7. What should we do in the first 24 hours? 8. Write down at least ten things in order as you will do them. 8. Write down at least ten things in order as you will do them.

9. What is Scarcity? What is Scarcity? Not enough resources to meet demand Not enough resources to meet demand Why do you think scarcity is a problem? Why do you think scarcity is a problem? What else is Economics? What else is Economics? Economics is common sense made confusing. Economics is common sense made confusing. Economics is the science of decision making. Economics is the science of decision making.

10. Economics? The social science concerned with how individuals and societies decide how to satisfy there unlimited wants given our limited resources. The social science concerned with how individuals and societies decide how to satisfy there unlimited wants given our limited resources. I can’t buy a car if I don’t have an income! I can’t buy a car if I don’t have an income! The science of decision making The science of decision making How to make decisions How to make decisions

11. “The Economic Problem” Scarcity… What is it? Scarcity… What is it? Limited resources but unlimited wants Limited resources but unlimited wants Unlimited Wants VS Limited Resources Unlimited Wants VS Limited Resources You can’t buy 10 candy bars if the store only has 5 candy bars to sell. You can’t buy 10 candy bars if the store only has 5 candy bars to sell. Can’t buy 3 burgers if you only have enough money for 1. Can’t buy 3 burgers if you only have enough money for 1. What are some things that you “want” to have? Do you have the resources to purchase them? What are some things that you “want” to have? Do you have the resources to purchase them? Needs VS Wants Needs VS Wants What are some of your needs…wants. What are some of your needs…wants.

12. Scarcity means… We must use things efficiently in order to maximize the number of goods and services we can produce. We must use things efficiently in order to maximize the number of goods and services we can produce. Don’t waste… Don’t waste… The Economic Problem (Scarcity)– The Economic Problem (Scarcity)– We can’t have everything we want!! We can’t have everything we want!! Because of this… we need to make choices. Because of this… we need to make choices. What we want (need) VS what we can give up (live without) What we want (need) VS what we can give up (live without)

13. How does scarcity impact you? Have you ever wanted something you couldn’t afford to buy? Have you ever wanted something you couldn’t afford to buy? Did a store ever run out of the item that you wanted? Did a store ever run out of the item that you wanted? Has anyone ever wanted you to do something that you didn’t have time to do? Has anyone ever wanted you to do something that you didn’t have time to do?

14. Production Possibilities Curve Graph showing the maximum combinations of goods and services that can be produced from a fixed amount or resources in a given period of time. Graph showing the maximum combinations of goods and services that can be produced from a fixed amount or resources in a given period of time. Because resources are limited we are only able to use so much of them to produce certain goods. Because resources are limited we are only able to use so much of them to produce certain goods. Pg. 23 of your text Pg. 23 of your text

15. Production Possibilities Curve

17. Opportunity Cost The true cost of choosing one alternative over the other. The true cost of choosing one alternative over the other. Trade offs – giving up one thing in order to obtain another. Trade offs – giving up one thing in order to obtain another. The one that you give up when the choice is made. The one that you give up when the choice is made. Give an example of a time when you had to make an economic choice. What was the opportunity cost? Give an example of a time when you had to make an economic choice. What was the opportunity cost? “Opportunity cost is the opportunity lost” “Opportunity cost is the opportunity lost”

18. Dialysis Activity

19. Scarcity…. Is scarcity a problem just for the poor or could the wealthy face this problem? Explain… Is scarcity a problem just for the poor or could the wealthy face this problem? Explain…

20. Opportunity Cost: The next best alternative after a choice was made. Think of it as the choice that took second place. Trade Offs: All choices that were not chosen when a decision was being made.

21. College Vs. Work What are you planning on doing after you finish high school? What are you planning on doing after you finish high school? College or work College or work What factors did you consider when making this decision? What factors did you consider when making this decision? money now or money later money now or money later Family Family How will this decision impact your future? How will this decision impact your future? What are the trade offs of this decision? Opportunity cost? What are the trade offs of this decision? Opportunity cost? Create you own example of a decision you have to make….what is the opportunity cost? What are the trade offs? Create you own example of a decision you have to make….what is the opportunity cost? What are the trade offs?

22. Identical twins Amal and Juan graduate with Bachelors degrees and receive the same job offer. Amal passes up the job offer to pursue a Masters degree while Juan takes the job offer and begins working. Identical twins Amal and Juan graduate with Bachelors degrees and receive the same job offer. Amal passes up the job offer to pursue a Masters degree while Juan takes the job offer and begins working. Two years pass and Amal graduates and begins working. By this time Juan has been promoted to a position that is comparable to Amal’s starting position, and Juan’s salary has increased to an amount that is comparable to Amal’s starting salary. Two years pass and Amal graduates and begins working. By this time Juan has been promoted to a position that is comparable to Amal’s starting position, and Juan’s salary has increased to an amount that is comparable to Amal’s starting salary.

23. So who made the better decision, Amal or Juan? In business and in life, every choice we make comes at a cost since we forgo other possible alternatives in the process; this cost — whether it’s money, time, education, health, et cetera — is known as an opportunity cost. More specifically In business and in life, every choice we make comes at a cost since we forgo other possible alternatives in the process; this cost — whether it’s money, time, education, health, et cetera — is known as an opportunity cost. More specifically In the example, one could argue that Amal made the better decision since a Masters degree would be valuable if both lost their jobs and found themselves in a competitive job market. Yet when you look at the situation in terms of opportunity costs, Amal’s Masters degree came at a cost of two years salary. If Amal and Juan stay on equal career paths from here on out, Juan ends up making the better decision. An opportunity cost is the value or benefit of the next best alternative.

24. Opportunity costs even come into play in the pursuit of happiness Opportunity costs are all around us and they differ from individual to individual. Take one look at Steve Jobs and Bill Gates and think of the opportunity costs if they had decided to forgo their entrepreneurial pursuits and continue their college education instead. Things would be very different now. Ultimately, opportunity costs apply to anything which is of value to a person and being conscious of how they apply to your situation can help in making a satisfactory choice/decision by considering the value or benefit of the next best alternative.

25. Review

26. Resources – Factors of Production Natural resources (Land)– “free gifts of nature” Natural resources (Land)– “free gifts of nature” Land, minerals, oil, forests, air, and timber Land, minerals, oil, forests, air, and timber Capital Resources – “manufactured aids to production” Capital Resources – “manufactured aids to production” Tools, machines, equipment, factories Tools, machines, equipment, factories Things used in producing goods and services and getting them to consumers. Things used in producing goods and services and getting them to consumers. Human Resources (Labor)– “mankind’s physical and mental talent” Human Resources (Labor)– “mankind’s physical and mental talent” These are the skills people have that are used to produce goods and services. These are the skills people have that are used to produce goods and services. Entrepreneur – the individual who combines the factors of production in order to produce a good or service. Entrepreneur – the individual who combines the factors of production in order to produce a good or service. Risk taker, policy maker, and innovator Risk taker, policy maker, and innovator

27. Factors of Production What are the four factors of production? With a shoulder partner, brainstorm all of the factors needed to manufacture a Hershey’s candy bar.

28. How do all of these factors work together to produce a candy bar?

29. Would it be possible to start a business without one of these factors?

30. TINSTAAFL There Is No Such Thing As A Free Lunch

31. TINSTAAFL A person or a society can not get something for nothing A person or a society can not get something for nothing Even if something appears to be free, there is always a cost to the person or to society as a whole even though that cost may be hidden or distributed. Even if something appears to be free, there is always a cost to the person or to society as a whole even though that cost may be hidden or distributed.

32. TINSTAAFL For example, you may get complimentary food at a restaurant during “happy hour", but the restaurant owner is responible for the expense of your meal and will attempt to recover that expense somehow. Some goods may be nearly free, such as fruit picked in the wilderness, but usually some cost such as labor or the loss of food for local wildlife is incurred.

33. TINSTAAFL With a shoulder partner, write down your own example of TINSTAAFL. With a shoulder partner, write down your own example of TINSTAAFL.

34. Recap What is the basic economic problem? What is the basic economic problem? As consumers what do we need to weigh when making economic choices? As consumers what do we need to weigh when making economic choices? What is economics? What is economics? How do trade offs lead to opportunity costs? How do trade offs lead to opportunity costs?

35. Factors of Production Create a visual that includes the factors of production: Include at least five pictures for each factor… Include at least five pictures for each factor… Include a description for each picture of why it fits in that category. Include a description for each picture of why it fits in that category. Pictures can be hand drawn and colored or cut out of a magazine. Pictures can be hand drawn and colored or cut out of a magazine.

36. What is a market?

37. Market….. A market is a place were consumers are able to buy and sell goods and services. A market is a place were consumers are able to buy and sell goods and services.

39. What does the circular flow model show us? What does the circular flow model show us? Why is a relationship between the factor market and the product market necessary for the economy to stay strong? Why is a relationship between the factor market and the product market necessary for the economy to stay strong?

40. Circular Flow of Income and Output Choose a product/good that you enjoy using/eating. Draw a circular flow income and output chart. Create a key and make sure the flow of money is a different color when compared to the flow of resources. Include at least two pictures….stick people are great. Label and provide a description of what is happening throughout the circular flow of goods/resources and money.

41. Types of Economics Macroeconomics – branch of economics that deals with economic theory and the economic decisions of large bodies like the government. Macroeconomics – branch of economics that deals with economic theory and the economic decisions of large bodies like the government. Theories of Economics Theories of Economics Countries and their governments Countries and their governments Trade between countries Trade between countries Microeconomics – branch of economics that deals with behavior and decisions of smaller unit like individuals and businesses. Microeconomics – branch of economics that deals with behavior and decisions of smaller unit like individuals and businesses. Families, businesses, and communities Families, businesses, and communities Domestic economies Domestic economies

42. 3 Basic Economic Questions What to produce? What to produce? With limited resources, deciding what is needed the most is often a factor in determining what will be produced. What is the need or want of this product? With limited resources, deciding what is needed the most is often a factor in determining what will be produced. What is the need or want of this product? What is the point of making a product that no one is going to buy. Businesses need to make money…so they choose products that people want. What is the point of making a product that no one is going to buy. Businesses need to make money…so they choose products that people want.

43. 3 Basic Questions Cont… How should it be produced? How should it be produced? Technology, labor, capital, ect. Technology, labor, capital, ect. getting the lowest cost to make the product. getting the lowest cost to make the product. Are we going to make the product from scratch or will a machine be making the product. Are we going to make the product from scratch or will a machine be making the product. What will each option cost? What will each option cost? Will having new technology allow us to lower our expenses? Will having new technology allow us to lower our expenses?

44. 3 Basic Questions Cont… Whom should it be produced for? Whom should it be produced for? Who is going to use this product? Who is going to use this product? Did Apple market the ipod to the large population of elderly people in the U.S. or the youth? Why? Did Apple market the ipod to the large population of elderly people in the U.S. or the youth? Why? Most goods and services are distributed to individuals through a price system. Most goods and services are distributed to individuals through a price system. If you want it and can afford to buy it…you will. If you want it and can afford to buy it…you will. Products can also be distributed through other means; force, first come, lottery, majority, ect. Products can also be distributed through other means; force, first come, lottery, majority, ect.

45. In Short… Economics is common sense made confusing Economics is common sense made confusing We can’t have everything that we want, so we have to make choices with our money. We can’t have everything that we want, so we have to make choices with our money. Businesses have to make choices with their products. Businesses have to make choices with their products. Society has to make choices about how it should or will function. Society has to make choices about how it should or will function. The Government makes choices about laws and expenses. The Government makes choices about laws and expenses. Just to name a few!!! Just to name a few!!!

46. Chapter Review What is the basic Economic question? What is the basic Economic question? What does a production possibilities curve show us? What does a production possibilities curve show us? What are the four factors of production? What are the four factors of production? What are trade offs and opportunity costs? What are trade offs and opportunity costs? What are the three basic economic questions? What are the three basic economic questions? Define microeconomics and macroeconomics. Define microeconomics and macroeconomics. How does the circular flow of income and output impact the economy? How does the circular flow of income and output impact the economy?

47. Entrepreneur Handouts

48. Research an Entrepreneuer

49. What is the Production Possibilities Curve?

50. Pages 12 - 17 Read the paragraphs and information assigned to you. On the white board, include the following: Title A summary written neatly of what the information says Any vocabulary words listed in text with the definition. Include examples if possible

51. Opportunity Cost Opportunity cost is the foregone benefit of the next best alternative when scarce resources are used for one purpose rather than another.

52. Economic Products

53. Goods and services that are useful, relatively scarce, and can be given or used by others. Goods and services that are useful, relatively scarce, and can be given or used by others. Economic products are scarce because they do not fulfill every individuals needs and wants therefore they command a price. Economic products are scarce because they do not fulfill every individuals needs and wants therefore they command a price.

54. Goods

55. Goods A good is an economic item that is economically useful or satisfies an economic want. Ex: book, iPod, shoes Consumer good: intended for use by an individual. Ex: pencil, bike Capital goods: manufactured goods used to produce other goods and services. Ex: oven in a bakery Durable good: Good that lasts more than three years. Ex: car Nondurable good: Good that lasts less than three years after regular use. Ex: food, paper

56. Service

57. Service A service is a type of work performed for someone. Example of services would be haircuts, home repairs, concerts. A service is a type of work performed for someone. Example of services would be haircuts, home repairs, concerts. Also work performed by someone would be viewed as a service. Example would be a masseuse, waiter, dog groomer. Also work performed by someone would be viewed as a service. Example would be a masseuse, waiter, dog groomer. A service is something done for another person, individual, or animal. A service is something done for another person, individual, or animal.

58. Consumer

59. Consumer Consumer is a person who uses goods and services to satisfy their wants and needs. Consumer is a person who uses goods and services to satisfy their wants and needs.

60. Value

61. Value In Economics, value is the dollar amount given to a good or service. In Economics, value is the dollar amount given to a good or service.

62. Paradox of Value

63. Paradox of value is the situation where some necessities of life have little value such as water and air while other non necessities such as diamonds have a much higher value. Scarcity is required for value. Water is plentiful in many areas so there is no real value. Diamonds are scarce which drives the price up.

64. Utility

65. Utility The capacity of an item to be useful and provide satisfaction. The utility of an item may vary from person to person as it is not fixed or measurable. The capacity of an item to be useful and provide satisfaction. The utility of an item may vary from person to person as it is not fixed or measurable. For an item to have value, it must be scarce and have utility. For an item to have value, it must be scarce and have utility. Diamonds are scarce and have utility which makes the price rise. Diamonds are scarce and have utility which makes the price rise. Water is not scarce in most regions and has utility which keeps the price low. Water is not scarce in most regions and has utility which keeps the price low.

66. Wealth

67. Wealth Wealth is the accumulation of products that are tangible, scarce, useful and transferable from one person to another. Wealth is the accumulation of products that are tangible, scarce, useful and transferable from one person to another. A nation’s wealth is comprised of all items including natural resources, factories, stores, houses, motels, theaters, furniture, clothing, books, highways, video games, and even footballs. A nation’s wealth is comprised of all items including natural resources, factories, stores, houses, motels, theaters, furniture, clothing, books, highways, video games, and even footballs. Services are not considered a piece of wealth because they are intangible. Services are not considered a piece of wealth because they are intangible.

68. Market

69. Market A market is a location or other mechanism that allows buyers and sellers an opportunity to exchange certain economic products. A market is a location or other mechanism that allows buyers and sellers an opportunity to exchange certain economic products.

70. Factor Markets

71. Markets where productive resources are bought and sold. This is where entrepreneurs hire labor for wages and salaries, acquire land for rent, and borrow money for interest. Markets where productive resources are bought and sold. This is where entrepreneurs hire labor for wages and salaries, acquire land for rent, and borrow money for interest. Individuals earn their incomes in factor markets. Individuals earn their incomes in factor markets.

72. Product Markets

73. Markets where producers sell their goods and services to consumers. Markets where producers sell their goods and services to consumers. The income that an individual receives in the factor market is returned in the product market when the individual purchases a good or service. The income that an individual receives in the factor market is returned in the product market when the individual purchases a good or service. This market serves as a link between producers and consumers. This market serves as a link between producers and consumers.

74. Economic Growth

75. Economic growth occurs when a nation’s total output of goods and services increases over time. Economic growth occurs when a nation’s total output of goods and services increases over time. Productivity is the most important factor of growth. Productivity is the most important factor of growth.

76. Productivity

77. Productivity Productivity is a measure of the amount of output produced by a given amount of inputs in a specific period of time. Productivity is a measure of the amount of output produced by a given amount of inputs in a specific period of time. If a company produces 800 items in one quarter and then in the next quarter produces 900 items the companies productivity has increased from one quarter to the next. If a company produces 800 items in one quarter and then in the next quarter produces 900 items the companies productivity has increased from one quarter to the next. Productivity is not just in terms of labor. It includes capital and land. Productivity is not just in terms of labor. It includes capital and land.

78. Circular Flow of Economic Activity

80. Division of Labor

81. Work is arranged so an individual worker does fewer tasks than before. Work is arranged so an individual worker does fewer tasks than before. In most cases, a worker who performs fewer tasks many times every day is likely to become more proficient than a worker who performs hundreds of different tasks in the same period. In most cases, a worker who performs fewer tasks many times every day is likely to become more proficient than a worker who performs hundreds of different tasks in the same period.

82. Specialization

83. Specialization Specialization takes place when factores of production perform tasks that they can do more efficiently than others. Specialization takes place when factores of production perform tasks that they can do more efficiently than others. Specialization does not have to refer just to labor. It could be a region of the country….Idaho specializes in potatoes, Iowa in corn, Wisconsin in cheese. Specialization does not have to refer just to labor. It could be a region of the country….Idaho specializes in potatoes, Iowa in corn, Wisconsin in cheese. Result is increased productivity. Result is increased productivity. Henry Ford and the assembly line is an example of division of labor and specialization. Henry Ford and the assembly line is an example of division of labor and specialization.

84. Human Capital

85. Human Capital is the sum of the skills, abilities, health, and motivation of people. Human Capital is the sum of the skills, abilities, health, and motivation of people. Government, business, and individuals can invest in human capital to make it more productive. Government, business, and individuals can invest in human capital to make it more productive.

86. Investing in the Future

87. Investments in human capital and physical capital can eventually increase production and promote economic growth. Investments in human capital and physical capital can eventually increase production and promote economic growth. Faster economic growth increases the amount of goods and services available Faster economic growth increases the amount of goods and services available

88. Economic Interdependence

89. Events in one part of the world have an economic impact on other parts of the world. Events in one part of the world have an economic impact on other parts of the world. Example: If basketball players are fighting with owners on a contract and do not play any games, thousands of people who park, sell tickets, serve food at the games, and sell merchandise all across the country will be out of work. Example: If basketball players are fighting with owners on a contract and do not play any games, thousands of people who park, sell tickets, serve food at the games, and sell merchandise all across the country will be out of work.

90. Read Wealth of Nations by Adam Smith Answer questions…

91. Crash Course Economics: Specialization and Trade https://www.youtube.com/watch?v=NI9T LDIPVcs https://www.youtube.com/watch?v=NI9T LDIPVcs https://www.youtube.com/watch?v=NI9T LDIPVcs https://www.youtube.com/watch?v=NI9T LDIPVcs