1. Economics Bell Ringer Wednesday, 6 January 2016
Use complete sentences to write an answer to the questions. Explain your reasoning:
Think about something that you spent money on.
What were the benefits and the costs of this purchase decision?
How do these benefits/costs affect your decision?

2. Economics
Chapter 1, Lesson 1

3. “Why Do I care?” Economics influences the lives of everyone on Earth.
Economics affects your life when you earn money and then decide to spend your money to buy something you need or want.
You might buy clothes, food, electronics, sports equipment, or any of the other hundreds of items available to buy.
You probably didn’t realize it, but the process of deciding what to buy and how much to pay for it applies some of the basic elements of thinking like an economist.
Understanding the fundamentals of how economists think will help you make better choices in your own economic decisions.

4. What’s the fairest way to handle the situation?
A storm has damaged the main highway leading to your town, so there have been no deliveries of essential, or even nonessential, items to neighborhood stores. Some people are running out of certain things they need or want. Others have lost electric power, and some have no running water. Below is a list of things you have that some of your neighbors are looking for.  For each item, explain at least one way you think is best (and perhaps fairest) to distribute these items among your neighbors.
a. One loaf of bread
b. One bicycle
c. An assortment of handyman tools in one toolbox
d. One bottle of aspirin
e. One half-full bottle of antiseptic and 10 cotton balls
f. Two one-gallon jugs of bottled water
g. One cellular smart phone
h. Three blankets
i. Ten towels
j. One MP3 player

5. Scarcity – The Basic Economic Problem
Economics is the study of how people satisfy competing wants and needs through the careful use of scarce resources.
What is Scarcity?
 The condition that results from society not having enough resources to produce all the things people want.

6. Our wants and needs
Economists often talk about people’s needs and wants.
In economic terms what is a “need”?
 is a basic requirement for survival
such as food, clothing, and shelter
In economic terms what is a “want”?
something we would like to have but is not necessary for survival

7. Goods and Services
Our needs and wants are usually expressed in terms of economic products.
These are “goods” and “services”.
Goods-
a useful, tangible item, such as a book, car, etc.
Services-
work that is performed for someone, for example home repairs, car repairs, haircuts, entertainers, etc.

8. Types of goods…
A durable good is one that lasts three years or more when used on a regular basis.
Durable goods include tools such as robot welders and tractors, and consumer goods such as automobiles.
A nondurable good is an item that lasts for fewer than three years when used on a regular basis.
Food, writing paper, and most clothing items are examples of nondurable goods.
A consumer good is a good intended for final use by individuals, such as shoes, a shirt, or an automobile.
A capital good is a tool or good such as machinery or equipment that is used by businesses to produce other products.

9. The Paradox of Value
The paradox of value (also known as the diamond–water paradox) is the apparent contradiction that, although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market.
Scarcity can’t fully explain the value of something.

10. What is “Utility” in economic terms?
Utility is the satisfaction experienced by the consumer of a good.
The utility may vary from one person to the next.
Diamonds are scarce and have utility; thus they possess a value that can be stated in monetary terms.
Water has utility but is not scarce enough in most places to give it much value. 

11. Wealth
What is wealth?
The accumulation of  products that are tangible, scarce, have utility, and are transferable from one person to another.
The wealth of a nation consists of all tangible items that can be exchanged
such as factories, stores, natural resources, houses, etc.

12. TINSTAAFL
 Because resources are limited, everything we do has a cost—even when it seems as if we are getting something “for free.” 
Most things in life are not free, because someone has to pay for producing them in the first place.
Economists use the term TINSTAAFL to describe this concept. TINSTAAFL means “There Is No Such Thing As A Free Lunch.”

13. Questions All Societies Face
Because of limited resources, we have to be careful how we use those resources.
Have to answer 3 basic questions
What are we going to produce?
How are we going to produce it?
Whom are we producing it for?

14. Bell Ringer- Thursday Sept. 1
What is Economics and why is it important to study?

15. Why do we study economics?
Economics is the study of human efforts to satisfy seemingly unlimited and competing wants through the careful use of relatively scarce resources.
Economics is also a social science because it deals with the behavior of people as they deal with this basic issue.
The four key elements of this study are description, analysis, explanation, and prediction.

16. Description Economics describes economic activity.
For example, we often hear about gross domestic product (GDP)
the monetary value of all finished goods and services produced within a country’s borders in a 12-month period.
GDP is the most comprehensive measure of a country’s total output and a key measure of a nation’s economic health.
Economics also describes jobs, prices, trade, taxes, and government spending.
Description allows us to know what the world looks like.
Only part of the picture, because it leaves many important “why” and “how” questions unanswered.

18. Analysis Economics analyzes the economic activity that it describes.
Why, for example, are the prices of some items higher than others?
Why do some people earn higher incomes than others?
How do taxes affect people’s desire to work and save?

19. Explanation Economics also involves explanation.
After economists analyze a problem and understand why and how things work, they need to communicate this knowledge to others.
Like all scientists, this explanation should be based in careful research that properly attributes ideas to source material so that other economists can evaluate and duplicate the work for accuracy.
If we all have a common understanding of the way our economy works, some economic problems will be easier to address or fix in the future.
When it comes to GDP, you will soon discover that economists spend much of their time explaining why the measure is, or is not, performing in the manner that is expected.

20. Prediction Finally, economics is concerned with prediction.
For example, we may want to know whether our incomes will rise or fall in the near future.
Because economics is the study of both what is happening and what tends to happen, it can help predict what may happen in the future, including the most likely effects of different actions.
It is important to realize that good economic choices are the responsibility of all citizens in a free and democratic society.

21. Summary
Economics deals with all these questions, and sometimes even more.
It is also a dynamic science in that the subjects it studies—individuals such as ourselves and the economy as a whole—are always changing.