1. 7 th Grade Social Studies Instructor: Mr. Babcock

3.  Part One Objectives  Part One Section One Vocabulary  Part One Section One Concepts  What is Economics?  Wants versus Needs  Choices  The Problem of Scarcity  The Factors of Production  Part One Section Two Vocabulary  Part One Section Two Concepts  Trade-Offs  Production Possibilities

4.  Are you able to explain how wants and needs differ?  Are you able to explain why scarcity faces all people at all times?  Are you able to identify and describe the four factors of production  How are trade-offs and opportunity costs related?  How can society’s trade-offs be shown on a production possibilities curve?

5.  Economics  Scarcity  Factors of Production  Land  Labor  Goods  Service  Capital  Productivity  Entrepreneurship  Technology

6.  What is economics?  Economics examines how individuals and societies try to get what they want and what they need using the resources that they have available to them  Formal Definition:  Economics is the study of how individuals and societies make choices about ways to use scarce resources to meet their needs and wants

7.  Wants versus Needs  Needs are the things that we considered to be vitally important in our society  There are the most basic needs such as food, clothing, shelter, oxygen  There are also needs to consider to be important in our society such as education, healthcare, and emotional well-being  Wants are the luxuries in life we would like to enjoy  Examples include new cars, electronics, vacations, etc.

8.  Choices  We all face choices about how to use our resources everyday and so do businesses.  When we make a choice about how to use one of those resources, we are also choosing how NOT to use that resource  Example- If you have $20 and you choose to use it to buy your favorite teacher lots of candy, you have also chosen NOT to use it for anything else such as something for your second favorite teacher  Every time we use a resource, we are choosing how and HOW NOT to use it

9.  The Problem of Scarcity  This is the most basic problem of economics – Scarcity is the idea that all resources are limited (scarce, finite) and wants and needs are unlimited  Therefore, there are never enough resources to meet all of the needs and wants – this is why we have to make choices about how we use resources  Example – even billionaires don’t actually have enough money to buy everything they could ever need and want

10.  The Factors of Production  What is this?  These are the four categories of types of resources needed for businesses to produce goods and services  What are they?  Land – All natural resources  Labor – The workers of the company that produce the good or service  Capital – All of the machines, buildings, vehicles, and tools needs to produce goods and services  Entrepreneurship – Individuals who start new businesses, create new ideas and inventions, and take the risks that drive our economy forward  Technology (not actually a resource but simply any improvement on the way things were done previously)

11.  Trade-Off  Opportunity Cost  Production Possibilities

12.  Trade-Offs  This is when you exchange one thing for the use of another  Examples – Exchanging your money for something you want to buy and use, Exchanging your time for an hour of studying so that you are prepare for the next day’s test, Exchanging having the charm of old fashioned cobble stone streets for the convenience and efficiency of modern new roads  The Cost of Trade-Offs  Notice that in each example, the resource was used for something, therefore not for all of the other possible uses of that resource -- this cost is known as the opportunity cost  Example- you have $20 that you choose to spend on snacks, instead of clothes, books, or music… the opportunity costs are the clothes, books, and music you chose NOT to spend your $20 on.

13.  Production Possibilities  This is the idea that how a business or government prioritizes its use of resources will determine what its outcomes will be  Example- A vehicle company produces cars and trucks. The company only has enough resources to produce 100 vehicles per month. Until last month, they produced 50 cars and 50 trucks each month. But, more people are buying trucks than cars so they decide to shift their production priorities as a result. For each additional truck the company produces, they will produce one less car…. So if they produce 70 trucks this year, they will only have enough resources for 30 cars.

14.  Production Possibilities- the “Classic Example”  Every government on earth deals with the classic example of Production Possibilities in which they must decide how much of their resources should go for military and defense spending AND how much should go to domestic programs for regular citizens  This is called the “Guns v. Butter” debate  Based on the philosophies and priorities of those in power as well as the circumstances in the country and the world at the present time