Why Semester Economics?

Why Semester Economics?
Using the principles discussed in this unit, you’ll be able to describe the financial world around you and make sound personal and business decisions.

It’s also a required course
But WHY is it required?

Because Studying ECONOMICS . . .
Helps You to Decide Who to Vote For in an Election Helps You to Understand Your Boss’ Thinking Helps You to Make Money Every Day

The Benefits of Studying ECONOMICS
Helps You to Understand World News Helps You Participate in Our System, and Helps You to Spend Your Money Wisely

The Benefits of Studying ECONOMICS
But, these young folks from over the pond say it best For more on “Why Study Economics”

Be Able to Define Economics
OBJECTIVE Be Able to Define Economics

ECONOMICS The Process of Making Decisions to Satisfy Unlimited Wants & Needs Using Limited Resources

ECONOMICS The Process of Making Decisions to Satisfy Unlimited Wants & Needs Using Limited Resources What the Heck Does That Mean?

ECONOMICS The Process of Making Decisions To Satisfy
Unlimited Wants & Needs Using Limited Resources

ECONOMICS All Together Now, Say It With Me. . . .
“The Process of Making Decisions To Satisfy Unlimited Wants & Needs Using Limited Resources.”

ECONOMICS “The Process of Making Decisions To Satisfy Unlimited Wants & Needs Using Limited Resources.” But how could you state this definition more simplistically?

ECONOMICS Economics is Making Decisions So That I . . .

Economics is Making Decisions So That I . .
Get the Most for the Least!!!

We Get the Most for the Least!!!
ECONOMICS We Get the Most for the Least!!! Economics is Making Decisions So That I . . Crash Course Economics Starting at 1:50 End at 3:16

What Are Your Economic Decisions?
Should I Get Out of Bed in the Morning? What Classes Should I Take? What Type of Car Should I Buy? What’s For Dinner? Who Should I Vote For?

EPF 1 - The student will demonstrate knowledge of basic economic concepts and structures.

Seed Question What is an economic decision you have had to make in your life?

Three Important Economic Concepts
Rewards Costs Decisions

Three Important Economic Concepts
Rewards - Benefits (What I Get Out Of It) Costs - What Resources I Give Up (Also Called “Trade Offs”) Decisions - Our Choices

Be Able to Provide Examples of . . . Benefits Economic Resources
OBJECTIVE Be Able to Provide Examples of . . . Benefits Economic Resources

Benefits What a Decision Will Do For Me: (Make Me $$$ for example)

Benefits What a Decision Will Do For Me:
(Give me a Sense of Relaxation)

Benefits What a Decision Will Do For Me: (Give Me Joy)

Benefits What a Decision Will Do For Me: Give Me Personal Satisfaction

Benefits What a Decision Will Do For Me: Give Me Confidence

Benefits What a Decision Will Do For Me: Recognition By My Peers

Three Economic Resources
LAND LABOR CAPITAL &

Three Economic Resources
LAND Natural Resources LABOR People with Skills CAPITAL Money or things . . . &

Fourth Economic Resources???
ENTREPRENEURS LAND Natural Resources LABOR People with Skills CAPITAL Money or things . . . &

Fourth Economic Resource???
ENTREPRENEURS LAND Natural Resources LABOR People with Skills CAPITAL Money or things . . . People Who Own & Operate Their Own Business &

Fourth Economic Resource???
ENTREPRENEURS People who own & operate their own business These 4 things together = “The Factors of Production” LAND Natural Resources LABOR People with Skills CAPITAL Money or things . . . &

People who own & operate their own business
Economic Resources ENTREPRENEURS People who own & operate their own business What makes these resources particularly valuable is their relative scarcity LAND Natural Resources LABOR People with Skills CAPITAL Money or things . . . &

People who own & operate their own business
Economic Resources ENTREPRENEURS People who own & operate their own business LAND Natural Resources LABOR People with Skills CAPITAL Money or things . . . What makes these resources particularly valuable is their relative scarcity & means that we do not have enough resources to satisfy all our wants and needs.

Seed Question What in your life would you describe as your economic resources, desired rewards, and most difficult to give up costs?

Other Important Economic Concepts
Opportunity Costs - the loss of potential gain from other alternatives when one alternative is chosen Unintended Consequences - outcomes that are not the ones foreseen and intended by a purposeful action

Other Important Economic Concepts
Marginal Benefits - the additional satisfaction or utility that a person receives from consuming an additional unit of a good or service Marginal Costs - the cost added by producing one extra item of a product.

How Does a Country Make its Economic Decisions?
QUESTION How Does a Country Make its Economic Decisions?

Through the Use of an Economic System
ANSWER Through the Use of an Economic System

Through the Use of an Economic System (or Process Perhaps?)
ANSWER Through the Use of an Economic System (or Process Perhaps?)

OBJECTIVE Be Able to List the Three Basic Economic Questions Every Country’s Economic System Must Answer

Three Basic Economic Questions
What Should We Produce? How Should We Produce? Who Gets What We Produce?

OBJECTIVE Be Able to List the Three Basic Economic Questions Every Country’s Economic System Must Answer They’re not much different than the questions you have to make in your own life

OBJECTIVE Be Able to List the Three Basic Economic Questions Every Country’s Economic System Must Answer But we’re going to look at the questions from a much larger perspective, from that of an entire country’s and that country is called . . .

OBJECTIVE Be Able to List the Three Basic Economic Questions Every Country’s Economic System Must Answer (The Kingdom of Mocha)

OBJECTIVE Be Able to List the Three Basic Economic Questions Every Country’s Economic System Must Answer (In the Kingdom of Mocha) Seed Question: In the Kingdom, . . . What did the residents produce? How did they produce? Who received what they produced

OBJECTIVE Be Able to ANSWER the Three Basic Economic Questions Every Country’s Economic System Must Answer (On Your Own Island) Seed Question: In your Kingdom, . . . What will the residents produce? How will they produce? Who will receive what they produced?

OBJECTIVE Be Able to ANSWER the Three Basic Economic Questions Every Country’s Economic System Must Answer (On Your Own Island) Seed Question: In your Kingdom, . . . What will the residents produce? How will they produce? Who will receive what they produced? TOUGH CALL? But that’s essentially what we’re asking our government to do, answer these questions!

OBJECTIVE Be Able to Identify the Three Primary Economic Systems Used in the World Today

Economic Systems of the World
Free Enterprise Capitalism Market Economy Socialism Mixed Economy Democratic Socialism Communism Planned Economy Command Economy

OBJECTIVE Be Able to Describe the Important Characteristics of Each Type of Economic System

Important Characteristics of All Economic Systems
Allowance for Business Ownership

Production of Consumer Products

The Amount of Competition

The Amount of Employment Available

Private Property Rights

Profit Potential

Social Services Available

OBJECTIVE Using the Important Characteristics of All Economics Systems, Describe Each Economic System

Primary Economic Systems

Primary Economic Systems
Using a loose leaf sheet of paper, make a chart like this one please. Turn the paper so it offers a “landscaped” (sideways) orientation .

OBJECTIVE & ASSIGNMENT
Based on your chart, be able to identify two advantages & two disadvantages of each economic system

What Economic System Do We Use in This Country?
QUESTION What Economic System Do We Use in This Country?

The Free Enterprise System
ANSWER The Free Enterprise System

ANSWER The Free Enterprise System As described by Adam Smith in The Wealth of Nations

ANSWER The Free Enterprise System As described by Adam Smith in The Wealth of Nations Three Major Points Division of Labor The Nature of Wages Foreign Markets

ANSWER The Free Enterprise System As described by Adam Smith in The Wealth of Nations And Inventor of the phrase “The Invisible Hand”

Seed Question What in our country’s history led us to using the Free Enterprise System?

Studying Using Quizlet https://www.youtube.com/watch?v=VyK09manjFU

Story A Lesson on Socialism "An economics professor said he had never failed a single student before but had, once, failed an entire class. The class had insisted that socialism worked - and that no one would be poor and no one would be rich, a great equalizer for all, for society. The professor then said ok, we will have an experiment in this class on socialism. He said that all grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone was given a B. The students who studied hard were upset, and the students who studied little were happy. But, as the second test rolled around, the students who hadn't studied much for the first test had studied even less, and the ones who studied hard weren't motivated to study hard again, and they decided they wanted a free ride too; so they studied little. The second Test average was a D! No one was happy. When the 3rd test rolled around the average was an F. The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for anyone else. All failed .... and the professor told them that the socialism they wanted would ultimately fail, as they had, because the reward of success normally goes to those that work harder, but when government takes the reward away; few will try so no one will succeed."

EPF 2: The student will demonstrate knowledge of the role of producers and consumers in a free enterprise or market economy

Google Classroom Pre-Test
EPF 2: The student will demonstrate knowledge of the role of producers and consumers in a free enterprise or market economy Google Classroom Pre-Test

EPF 2:. The student will demonstrate knowledge
EPF 2: The student will demonstrate knowledge of the role of producers and consumers in a free enterprise or market economy

OBJECTIVE Be able to describe the most important facets of a “Free Enterprise System”

Free Enterprise Freedom of Choice Open Mkt. (S & D) The Profit Motive
Competition Limit Gov. Control Free Enterprise

OBJECTIVE Be able to identify the freedoms generally allowed in a free enterprise system

OBJECTIVE What Are They?
Be able to identify the freedoms generally allowed in a free enterprise system What Are They?

Freedom of Choice When to Buy When to Sell To Make Profit To Compete
To Own Freedom to Decide

Freedom of Choice Or simply put

Freedom of Choice Or simply put To be an Entrepreneur !!!

Seed Question Freedom of Choice
How would you react or feel if you lived in a country that did not provide for these freedoms?

Seed Question Freedom of Choice
How would you react or feel if you lived in a country that did not provide for these freedoms? When to Buy When to Sell To Make Profit To Compete To Own Freedom to Decide

OBJECTIVE Be able to describe the open market using the concepts of
“Supply & Demand”

Define Supply & Demand Demand: Supply
The ability & desire of customers to own products Supply Products/Services available for sale

Describe the Laws of Supply & Demand
Price Laws of Demand: The price law of demand says that as the price of a good rises, the demand will go down, and vice versa. Price Laws of Supply The price law of supply states that as the price rises, the amount of a good supplied rises, and vice versa.

Quantity Laws of Demand: If the quantity of a good demanded falls, the price will fall, and vice versa. Quantity Laws of Supply If the quantity of a good supplied rises, the price falls, and vice versa.

Quantity Laws of Demand: If the quantity of a good demanded falls, the price will fall, and vice versa. Quantity Laws of Supply If the quantity of a good supplied rises, the price falls, and vice versa. See Handout

Equilibrium The point at which the amount demanded is equal to the amount supplied meaning that there is no wasted product.

Equilibrium The point at which the amount demanded is equal to the amount supplied meaning that there is no wasted product. More on This in the Pricing Unit

Supply & Demand Exercise

Seed Question Describe some products that you’ve seen respond to the Laws of Supply & Demand (Besides Gasoline)

OBJECTIVE Be able to define the following terms associated with the concept of PROFIT: - Income, - Expenses, - Costs, - Gross Profit, - Net Profit, & - Risk

Profit = Incentive Income - the amount of money a business receives from the sales of its goods/services Cost - The amount of money a company spends to get product into the store Expenses - The amount of money a company spends on the operation of the business

Profit = Incentive Gross Profit - Amount of money made after the cost of goods is subtracted (Income - Cost) Net Profit - The amount of money made after the cost of goods & expenses are subtracted out (Income - Cost - Expenses) Risk - The “gamble” a business or person takes that they might lose something instead of being rewarded

Point to Remember

Point to Remember Profit is Good

Profit is Good Seed Question Why is it good?

Profit is Good Seed Question
Answer: Motivation, Incentive, Drive, Goals, etc.

What are some examples of economics incentives?
Profit is Good Seed Question What are some examples of economics incentives?

Profit is Good Seed Question
Answer: Income, Profit, Interest Income, Investment Income, etc..

What Do We Risk Losing? Our own money
The money of other people (friends, relatives, banks, etc.) Our time & energy that we could spend on a career Our hopes/dreams (self esteem, inheritance, freedom, etc.)

Be able to discuss ways a business can increase its profits
OBJECTIVE Be able to discuss ways a business can increase its profits

OBJECTIVE Be able to discuss ways a business can increase its profits Because “Profit is Good”

OBJECTIVE Be able to discuss ways a business can increase its profits Common Sense: How would you increase profits?

Increasing Profits Raise Prices Increase Sales Increase Efficiency
Boost Productivity

Increasing Profits Raise Prices ????????? Increase Sales
Increase Efficiency Boost Productivity

“Return on Investment”
Increasing Profits It’s Called R O I “Return on Investment” Raise Prices ? Increase Sales Increase Efficiency Boost Productivity

4th Trait of Free Enterprise

OBJECTIVE Be able to discuss in a short answer question the advantages to competition in our economy

Competition A rivalry between two or more companies to attract scarce (limited) customer dollars Market Share - A company’s part of the total market for a product 35%

How to Compete Lower prices of course.

How to Competition Prices of course, but how else might I compete with another business?

How to Competition Lower Prices Better Quality Products
Better Customer Service More Convenience More Variety of Products Better Marketing

Benefits of Competition
New Products & Services Variety of Products/ Services Lower Prices Better Customer Service Higher Quality Merchandise More Information Provided Etc.

OBJECTIVE Be able to identify the consequences of a lack of competition in our economy

Consequences of No Competition (Also Called Colluding or Price Fixing)
Prices will go up Innovation will slow Service might suffer Quality might suffer

Consequences of No Competition (Also Called Colluding or Price Fixing)
Prices will go up Innovation will slow Service might suffer Quality might suffer And some experts believe it takes only 35% of market control to influence prices in a market

OBJECTIVE In a matching exercise & short essay, be able to describe the role of government in a Free Enterprise system

Seed Question The Role of Government
What do you believe the role of government should be in our Free Enterprise system?

The Role of Government Its the Law
Protect Business Property (fire, police, patents) Enforce Contracts Settle Disagreements Collect & Set Taxes Its the Law

The Role of Government Its the Law Provides for the Public Good
Acts as a Consumer Provides for the Public Good Provides for National Security Its the Law

Its the Law The Role of Government Provide for Public Welfare
Protect Public Health Regulate/Stabilize Economy Conserve the Environment Protect Consumers Protect Competition Regulate the Workplace Its the Law

The Role of Government Services Provided
Military Police Fire Protection Education Infrastructure Postal Libraries Welfare Services

The Role of Government Rules & Regulations
Anti-Monopoly Regs. Sherman Anti-Trust Act of 1890 Clayton anti-trust Act of 1914 Federal Trade Commission (FTC) Other Acts Consumer Product Safety Commission Securities/Exchange Commission (SEC) Wheeler-Lea Act (Adv) Zoning, Licensing, Building Codes

Business Protection Rules Patents Copyrights Trademarks Worker Protection Rules Equal Employment Opportunity Commission Occupational Safety & Health Admin. (OSHA) Minimum Wage Rules Child Labor Laws

Consumer Protection Robinson-Patman Act (Price Discrimination) Food & Drug Administration (FDA)

The Role of Government Taxes
Progressive Taxes Proportional (Flat) Taxes Regressive Taxes

Income Taxes Sales Taxes Property Taxes Business Taxes

Income Taxes Largest income source Levied against individuals & business Based on salaries/income Allows for “deductions” Business collects & sends to the government

Sales Taxes Levied against sales of goods/services Varies from state to state Collected by the business

Property Taxes Levied against the value of most personal property Levied against individuals & business

Business Taxes Income (Federal, State, & Local) Personal property Payroll Social Security Unemployment

Business Taxes (cont.): Sales taxes Corporation taxes Business licenses Car/truck licenses Fees for service

OBJECTIVE In a matching exercise & short essay, be able to describe the role of government in a Free Enterprise system See Handout / Activity

Free Enterprise in the USA REVIEW
Freedom of Choice Open Mkt. (S & D) The Profit Motive Competition Limit Gov. Control Free Enterprise

Be able to define the term “Business”
OBJECTIVE Be able to define the term “Business”

“Business” OBJECTIVE Be able to define the term
Unscramble the Definition on Quizlet Scatter

“Business” An activity that satisfies economic needs by planning, organizing, & controlling resources to produce & market goods & services

Business An activity . . . Something done
that satisfies Makes someone happy economic wants & needs Has monetary value by planning, Developing a process organizing, Getting resources in order & controlling Directed by management resources Factors of production to produce Create, improve upon, change & market Moving goods to consumers goods & services. Products or things done for others

Business Activity For the businesses listed below, explain how each meets the definition of business: McDonald’s Nichols Hardware Google (Your Choice) An activity . . . that satisfies . . . economic wants & needs by planning, organizing, & controlling . . . resources . . . to produce . . . & market . . . goods & services.

OBJECTIVE Be able to describe the three major types of business ownership & discuss their advantages & disadvantages

SOLE PROPRIETORSHIP Owned & operated by one person (Usually highly skilled) employs large % of the workforce examples include plumbers, dentists, beauticians, small shop owners, etc.

PARTNERSHIP Two or more people legally agree to share the ownership & responsibilities of a business

CORPORATION A charted (legal) entity that operates apart from the owners the corporation will often sell stock the stockholders will elect a board of directors to run the company

CORPORATIONS (Discussion)
Doctors will often incorporate their practice; Why? (Discussion)

SOLE PROPRIETORSHIP PARTNERSHIPS CORPORATIONS ACTIVITY: Identify three advantages & disadvantages of each Advantages 1. 2. 3. Disadvantages 1. 2. 3.

SOLE PROPRIETORSHIP Disadvantages Advantages capital ($) is limited
can’t have “group-think” no help available w/ other skills big Risk Advantages easy to start decisions are easy to make low taxes fewer gov. regulations you get all the money!!

PARTNERSHIPS Advantages Disadvantages
more ideas & opinions to consider you have help to run the business the risk is shared more capital available Disadvantages more ideas & opinions to consider (?) harder to make decisions personally at risk death of a partner causes problems

CORPORATIONS Advantages Disadvantages
liability is limited to your investment it is easy to raise more capital (sell more stock) it is easy to get into & out of the corporation (sell or buy stock) Disadvantages often a complex & changing ownership picture making decisions difficult highly regulated higher tax rates

OTHER FORMS OF BUSINESS OWNERSHIP
Franchise: a legal agreement to operate a business in the name of a recognized company. Advantages Disadvantages Franchisor offers help Expensive to buy Planning already done Limited creativity

Franchise: a legal agreement to operate a business in the name of a recognized company. (Franchisee must follow Franchiser’s Guidelines regarding business name, slogans, prices, products, etc.) Advantages Disadvantages Franchisor offers help Expensive to buy Planning already done Limited creativity

Cooperative: A company owned by the customers of that company. Advantages Disadvantages Customer Support Frequent Ownership Changes Positive Image Disputes Among the Owners Loyal Customers

Complete the EPF Quizlets #2 and # 8
HOMEWORK Complete the EPF Quizlets #2 and # 8

STUDY Complete the EPF 2 Quiz

And Bring Some Cash to Class Next Time
STUDY Complete the EPF 2 Quiz And Bring Some Cash to Class Next Time

EPF 3 - The student will demonstrate knowledge of the price system

EPF 3 - The student will demonstrate knowledge of the price system
Google Classroom Pre-Test

Define Supply & Demand Demand: Supply
The ability & desire of customers to own products Supply Products/Services available for sale

Be able to graph the open market using the concepts of Supply & Demand
OBJECTIVE Be able to graph the open market using the concepts of Supply & Demand

ACTIVITY “The Tootsie Pop Game”
1.) Offer tootsie rolls for sale starting at a high price & working down, graph results. Then give the tootsie rolls to a student to keep, but ask at what price they may be willing to make some available for sale; graph the results.

Tootsie Roll “Demand Schedule”

Tootsie Roll “Supply Schedule”

Supply & Demand “Plot the Points”

Supply & Demand “Plot the Points”
Bring Up Active Vision on Computer One

Supply & Demand Graphing

Supply & Demand Graphing Demand

Supply & Demand Graphing Supply

Supply & Demand (Finding the Equilibrium Point)

Supply & Demand (Finding the Equilibrium Point)
At this point I will Max. my profit & have no waste: Approx. 8 $ .09 each = $ .72

Supply & Demand A Change in Demand

Supply & Demand A Change in Supply

The Laws of “Supply & Demand”
SEE HANDOUT

The Laws of “Supply & Demand” in the Movies

Lemonade Stand

What Determines the Amount of Supply
Tastes and fashion Population # of sellers in the market Price Expected

What Determines the Amount of Demand
Price of good or service Price of related goods Consumer’s income Business taxes & subsidies

What Determines the Amount of Supply & Demand
Tastes and fashion Population # of sellers in the market Price Expected Price of related goods Consumer’s income Price of good or service Business taxes & subsidies

OBJECTIVE Be able to describe what the terms “Buyer’s” and “Seller’s” market mean &

Supply & Demand Graphing a Buyer’s Market
. . . When the price is above equilibrium price

Supply & Demand Graphing a Seller’s Market
. . . When the price is below the equilibrium price

OBJECTIVE Be able to define elastic & inelastic demand and identify the factors that encourage elasticity

Supply & Demand Elasticity
Elastic Demand D1 Elasticity is a measure of a variable's sensitivity to a change in price

Supply & Demand Elasticity
So, as the price changes, the amount of demand changes substantially S1 Elastic Demand D1

Supply & Demand Inelasticity
Inelastic Demand Inelasticity is a measure of a variable's LACK OF sensitivity to a change in price

Supply & Demand Inelasticity
So, as the price changes, the amount of demand changes very little S1 D1 Inelastic Demand

What Causes Elasticity?
The existence of substitutes A product being a luxury The product represents a large portion of a consumer’s income The amount of competition

Be able to define derived demand
OBJECTIVE Be able to define derived demand

OBJECTIVE Be able to define derived demand Noun ECONOMICS A demand for a commodity, service, etc., that is a consequence of the demand for something else.

OBJECTIVE EXAMPLES: Designer clothing creates a derived demand for fabrics and textiles If the demand for leather belts rises, the cattle handlers who sell the cowhides to the leather suppliers can plan for an increased demand The demand for fast food has generated demand for healthy food alternatives Be able to define derived demand Noun ECONOMICS A demand for a commodity, service, etc., that is a consequence of the demand for something else.

The Laws of Supply & Demand
Seed Questions Identify three products that are elastic and three products that are inelastic PLUS . . .

The Laws of Supply & Demand
Seed Questions What two products are you aware of that generate derived demand? Which two entrepreneurs (businesses) have taken advantage of the examples of derived demand?

OBJECTIVE Be able to describe how demand for a product can generate higher wages for the workers in that field No matter what the type of demand is in play, any increased in demand can lead to higher wages for those employed in the industry and vice versa.

OBJECTIVE Be able to describe how demand for a product can generate higher wages for the workers in that field For example, real estate salespeople do much better financially during periods of economic rallies

OBJECTIVE Be able to describe how demand for a product can generate higher wages for the workers in that field For example, real estate salespeople do much better financially during periods of economic rallies OTHER EXAMPLES???

“That Price is Out of Whack!”
Sometimes the market for a product or service goes “out of whack.” This results in either surpluses or shortages. If there’s a surplus, then precious resources were wasted in the creation of the product. If there’s a shortage, then people in need will go without

“That Price is Out of Whack!”
Sometimes the market for a product or service goes “out of whack.” This results in either surpluses or shortages. If there’s a surplus, then precious resources were wasted in the creation of the product. If there’s a shortage, then people in need will go without What are some “Out of Whack” prices?

“Out of Whack” Price Fixes
Price Freezes Price Ceilings Price Floors

Price Freezes When Prices are fixed at a particular level and no increases are allowed Price Ceilings Price Floors

Price Freezes Price Ceilings Price Floors A control or limit on how low a price can be charged for a product

Price Freezes Price Ceilings A control or limit on how high a price is charged for a product Price Floors

Price Freezes When Prices are fixed at a particular level and no increases are allowed Price Ceilings A control or limit on how high a price is charged for a product Price Floors A control or limit on how low a price can be charged for a product

“Out of Whack” Price Fix Examples
Price Freezes 1970’s Nixon Price Freeze Hurricane Price Freezes Price Ceilings New York City Rent Controls Florida Insurance Rates Venezuelan Limits on the Cost of Food Price Floors Minimum Wage Laws U. S. Grain Subsidies

“Out of Whack” Price Fix Graphs
Price Floors Price Floors A control or limit on how low a price can be charged for a product

Price Floors What does a price floor do to the interaction between the Laws of Supply & Demand? NOTE THAT THE PRICE FLOOR IS HIGHER THAN EQUILIBRIUM

Price Floors Because demand is less than supply, there will be a surplus of product on the market NOTE THAT THE PRICE FLOOR IS HIGHER THAN EQUILIBRIUM

LIKEWISE

Price Ceilings Price Ceilings A control or limit on how high a price is charged for a product

Price Ceilings What does a price ceiling do to the interaction between the Laws of Supply & Demand? NOTE THAT THE PRICE CEILING IS LOWER THAN EQUILIBRIUM

Price Ceilings Because demand is higher than supply, there will be a shortage of product on the market NOTE THAT THE PRICE CEILING IS LOWER THAN EQUILIBRIUM

“Out of Whack” Price Fix Impacts
Price Ceilings & Floors Seed Question With a partner, do some research on the economic impacts of price ceilings & floors on an economic system. Use real life examples

“Supply & Demand” (Not)

EPF 4 - The student will demonstrate knowledge that many factors affect income

EPF 4 - The student will demonstrate knowledge that many factors affect income
What we already know Income - the amount of money a business receives from the sales of its goods/services (Also called Revenue) Cost - The amount of money a company spends to get product into the store Expenses - The amount of money a company spends on the operation of the business Net Profit - The amount of money made after the cost of goods & expenses are subtracted out. This is the money we get to keep!

Net Profit = Revenue - (Cost + Expenses)
P = R - (C + E) EPF 4 - The student will demonstrate knowledge that many factors affect income What we already know AND that . . . Net Profit = Revenue - (Cost + Expenses)

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income

For Example, In the Home Remodeling Industry
OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income For Example, In the Home Remodeling Industry

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Physical Capital Improvements Increased Productivity Increasing Market Value Enhance Human Capital (Training & HR) Lower Cost of Production Economic Growth Increased Investment

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Increased Productivity: - An average measurement of the efficiency of production. It can be expressed as the ratio of output to inputs used in the production process.

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Enhance Human Capital (Training & HR): Enhancing all of the knowledge, talents, skills, abilities, experience, intelligence, judgment, and wisdom possessed individually and collectively by individuals in a population

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Physical Capital Improvements: All of the equipment and all of the other physical things that a business owner or company invests money into when they want to produce something

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Lower Cost of Production: The costs related to making or acquiring goods that generate revenue for a firm. Examples include labor, raw materials, consumable manufacturing supplies and general overhead

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Increased Investment - To put resources (Land, Labor, Capital) into something with the expectation of some benefit in the future

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Increasing Market Value - the amount for which something can be sold in a given market (Just as in Supply & Demand)

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income Economic Growth - the increase in the market value of the goods and services produced by an economy over time. It’s measured as the percent rate of increase in production

OBJECTIVE Be able to describe the factors that can lead to an increase in a company’s income (Review) Physical Capital Improvements Increased Productivity Increasing Market Value Enhance Human Capital (Training & HR) Lower Cost of Production Economic Growth Increased Investment

OBJECTIVE Be able to describe the factors that can lead to an increase in a country’s income

OBJECTIVE Be able to describe the factors that can lead to an increase in a country’s income Physical Capital Improvements Increased Productivity Increasing Market Value Lower Cost of Production Human Capital (Training & HR) Economic Growth Increased Investment

You may notice they’re the same
OBJECTIVE Be able to describe the factors that can lead to an increase in a country’s income Physical Capital Improvements Increased Productivity Increasing Market Value You may notice they’re the same Lower Cost of Production Human Capital (Training & HR) Economic Growth Increased Investment

EXERCISE Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals below Physical Capital Improvements Increased Productivity Increasing Market Value Lower Cost of Production Human Capital (Training & HR) Economic Growth Increased Investment

EXERCISE Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals below (You can do a paper or PowerPoint) Physical Capital Improvements Increased Productivity Increasing Market Value Lower Cost of Production Human Capital (Training & HR) Economic Growth Increased Investment

EXERCISE Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals discussed (Examples) Physical Capital Improvements China’s government has made huge investments in factories, urban infrastructure and heavy machinery

EXERCISE Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals discussed (Examples) Europe: The “Reinvention of human capital policies is required to avoid increasing welfare state dependency among the unskilled and to reduce inefficiencies in human capital formation.” Human Capital (Training & HR)

EXERCISE Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals discussed (Examples) “Fact: it costs significantly less to make products in low-cost countries than in local, developed nations. And you can easily compare the costs of a product manufactured in both locations to prove it.” Lower Cost of Production

EXERCISE Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals discussed (Examples) Economic growth in the United States is constantly being driven forward by ongoing innovation, research and development as well as capital investment Economic Growth

EXERCISE PRESENTATIONS
Find, summarize, & present a news article discussing a country’s efforts to achieve three of the goals discussed PRESENTATIONS

OBJECTIVE Be able to describe the factors that can lead to an increase in your personal income and standard of living

OBJECTIVE Be able to describe the factors that can lead to an increase in your personal income and standard of living Where Standard of Living is defined as - “The degree of wealth and material comfort available to a person or community.”

EXERCISE Be able to describe the factors that can lead to an increase in your personal income and standard of living Rank (A. B. C. etc.) the occupations listed below in terms of their usual income potential from highest to lowest . Restaurant Waiter B. Aerospace Engineer Professional Athlete D. Supreme Court Justice E. Nurse

EXERCISE Be able to describe the factors that can lead to an increase in your personal income and standard of living Rank (A. B. C. etc.) the occupations listed below in terms of their usual income potential from highest to lowest . Restaurant Waiter B. Aerospace Engineer Professional Athlete D. Supreme Court Justice E. Nurse Answer? C D B E A

What basis did you use for your Ranking?
EXERCISE Be able to describe the factors that can lead to an increase in your personal income and standard of living Rank (A. B. C. etc.) the occupations listed below in terms of their usual income potential from highest to lowest . Restaurant Waiter B. Aerospace Engineer Professional Athlete D. Supreme Court Justice E. Nurse What basis did you use for your Ranking?

OBJECTIVE Be able to describe the factors that can lead to an increase in your personal income and standard of living Productivity Training & Education Geographic Location Sales Skills Market Value Supply & Demand Experience

EPF 5 - knowledge of a nation’s economic goals

OBJECTIVE Be able to describe the official measures of an economy’s health or, in other words, “How do we know if the economy is doing well?”

MEASURES OF AN ECONOMY’S HEALTH
Seed Questions How is our economy doing? How do you know?

WHY IS IT IMPORTANT?

BECAUSE “Its the economy!”
The state of the economy is a major factor in how people vote for public officials

Seed Question Economic Goals
What should our economic goals be for this country??? (Identify at least three)

Economic Goals Usually a country’s economics goals revolve around three issues? Inflation Employment Productivity

Economic Goals 1. Low Inflation 2. Full Employment 1 - 5% is ideal
10% + is painful Deflation is bad also 2. Full Employment 96% is full All 16+ yrs. old & able to work

Economic Goals 3. Productivity to Increase
Found by dividing input (of resources) by output ($ value)

Economic Goals But how do we know when we’ve reached our economic goals?

Economic Goals But how do we know when we’ve reached our economic goals? We Look at our Economy’s Measuring Devices

Economic Goals But how do we know when we’ve reached our economic goals? We Look at our Economy’s Measuring Devices What are they?

Economic Measuring Devices
GNP (GNDP) Total value of a nation’s products & services in a year:

Standard of Living: Measure of the value of goods & services people have: Divide GNP by population For example, one year, GNP was $4,235,000,000,000 & the population was 240 million. Therefore, the Standard of living was $17,646

Consumer Price Index Measures the average price of 400 different normal household products Also called the “Cost of Living Index”

Unemployment Figures % of workforce out unemployed

Unemployment Figures % of workforce out unemployed But it’s not that simple We have to look at the types of unemployment

Structural Unemployment: Unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand. Employees need to be retrained But it’s not that simple We have to look at the types of unemployment

Cyclical Unemployment: Occurs within the business cycle. During prosperity, cyclical unemployment will be low, during depressions, high. Calls for an effort to recover the economy. But it’s not that simple We have to look at the types of unemployment

Frictional Unemployment: Exists in any economy due to people being in the process of moving from one job to another. Can be positive & might be as high as 4% of unemployment But it’s not that simple We have to look at the types of unemployment

Uncounted Unemployment: These are people who have stopped trying to find work because they’ve lost hope of finding work. They need to be inspired and encouraged to believe that better times can be had. But it’s not that simple We have to look at the types of unemployment

OBJECTIVE Be able to describe the “Economic Cycle” and what factors influence its fluctuations

The Economic Cycle Prosperity Recession Recovery GNP Depression TIME

The Economic Cycle Make a Large Chart Inflation Employment
Productivity The Economic Cycle

Prosperity Lowest Unemployment Maximum Output
Highest Consumer Spending Possible Inflation High Confidence

Recession General Slowdown in the Economy Unemployment Rising
Fewer Good/Services Being Produced Spending Slows Down Confidence is Waning (Going Down)

Depression Prolonged Recession Lowest Amount of Spending
Highest Unemployment Production is at its Lowest Tax Collection is Down Possible Deflation Feelings of Hopelessness Poverty Occurs

Recovery Economy Picks Up Unemployment Decreases Production Increases
Spending Increases Confidence Recovers

The Economic Cycle What would you do if you were a ________ during a ________ business cycle?

The Economic Cycle Business What will you do??? Consumer Government
MAKE ANOTHER LARGE CHART Business Consumer Government The Economic Cycle What will you do???

Prosperity Business:

Prosperity Business: Invests/Expands Hires More People
Pays More in Taxes Maintains Max. Inventories Reaps Profits Keeps Prices High

Prosperity Consumers: The Government

Prosperity Consumers: The Government Work Spend, Spend, Spend
Save Some The Government Collects Taxes Keeps Interest Rates High

Recession Business:

Recession Business: Starts to slow down production Reduces stock
Cuts back on investments & expansion Lays off staff

Recession Consumers: The Government

Recession Consumers: The Government Spend less & save more
Protect their jobs more The Government Encourages investment by lowering interest rates Might spend more to stimulate the economy

Depression Business

Depression Has massive layoffs or lowers salaries Stops spending
Business Has massive layoffs or lowers salaries Stops spending Eliminates stock (sales) spends their savings Cuts back on quality Lowers prices

Depression Consumers:

Depression Stop Spending Spend Their Savings Convert Wealth to Dollars
Consumers: Stop Spending Spend Their Savings Convert Wealth to Dollars Loiter Open Their Own Businesses

Depression The Government:

Depression Lowers interest rates more Offers job programs
The Government: Lowers interest rates more Offers job programs Spends more on welfare services Spends more to stimulate the economy (?) Cheerleads

Recovery Business:

Recovery Business: Does the opposite of a recession: Hires Spends more
Invests Produces Risks more

Recovery Consumers: The Government:

Recovery Consumers: The Government: Spend more Save less
Collects more tax money Raises interest rates Spends more (?)

The Economic Cycle GNP TIME

Complete the “Up or Down” Exercise
ASSIGNMENT # 1 Economic Cycle Complete the “Up or Down” Exercise

ASSIGNMENT # 2 Economic Cycle
With a partner or two, discuss what stage in the economic cycle our country is currently experiencing? Each individual in the group needs to find an article supporting your position on the stage of the economic cycle you believe we’re experiencing and summarize it. From your charts, identify three or more steps you believe the government, businesses, and consumers should each be taking at this point in time? You can include your own opinions

OBJECTIVE Be able to describe the actions a government can do to mitigate the impacts of bad economic times

OBJECTIVE Be able to describe the actions a government can do to mitigate the impacts of bad economic times Investment Tax Credits Job Training Programs Fiscal Policy Monetary Policy Unemployment Insurance “Pure” Research

Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Investment Tax Credits - An amount that businesses are allowed to deduct from their taxes reflecting an amount they reinvest in themselves. Investment tax credits are structured to reward and encourage economic growth

Job Training Programs - Training programs and other services that are available to assist workers who have been laid off or are about to be laid off. Services are designed to meet local needs and may vary from state to state.

Unemployment Insurance - A small source of income for workers who have lost their jobs through no fault of their own. Workers who quit or who are self-employed are generally not eligible

“Pure” Government Research -
Be able to describe the actions a government can do to mitigate the impacts of bad economic times “Pure” Government Research - A term covering funding for research in the areas of science, technology and social sciences. The funding is obtained through a competitive process in which only the most promising receive an award. Such processes, which are run by government, corporations or foundations, allocate scarce funds

Fiscal Policy - The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy

Fiscal Policy - The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy For example, increasing federal spending might stimulate job creation or reducing taxes might give people more money to spend thus stimulating the economy

Fiscal Policy - The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy For example, increasing federal spending might stimulate job creation or reducing taxes might give people more money to spend thus stimulating the economy Or Does it?

Monetary Policy - The management of money supply and interest rates. It’s used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity

Monetary Policy - The management of money supply and interest rates. It’s used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity For example, what does increasing the money supply of the country do for the economy? OR What does decreasing the interest rates charged banks do for the economy?

Fiscal Policy- Monetary Policy – DEBATE -

EXERCISE Be able to describe the actions a government can do to mitigate the impacts of bad economic times Investment Tax Credits Job Training Programs Fiscal Policy Monetary Policy Unemployment Insurance “Pure” Research EXERCISE Research the history and content of these government programs and present your findings.

EPF 5 - knowledge of a nation’s economic goals
COMPLETE THE EPF 5 QUIZLET

EPF 6 - Knowledge of the Nation’s Financial System (Money & Banks)

But first, some “Jargon” (Technical Language) Durability Portability Divisibility Uniformity Acceptability Medium Exchange Store of Value Measure Commodity Fiat Return Intermediaries Facilitate Transactions and . . . Financial Institutions Financial Market Place Financial Transactions

But first, some “Jargon” (Technical Language) Durability Portability Divisibility Uniformity Acceptability Medium Exchange Store of Value Measure Commodity Fiat Return Intermediaries Facilitate Transactions and . . . Financial Institutions Financial Market Place Financial Transactions See EPF 6 Vocab. Quizlet

Complete the EPF 6 Pretest in Google Classroom

EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money and its characteristics

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or . . .

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Characteristics: Durable Divisible Limited in Supply Portable Uniform Accepted

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Durable - Bills & coins can be easily replaced should they become damaged or worn out

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Divisible – Divisibility indicates that money can be broken down into smaller values

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Limited in Supply – Ensures that money holds its value

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Portable – Portability says that money can easily be transported from one location to another

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Uniform – Uniformity provides for a standard look to the various denominations of bills and currency

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Accepted – Acceptability requires that the money be commonly agreed upon as a value exchange method

Objective – Be able to define money and its characteristics MONEY: Anything widely accepted as final payment for goods and services or A tool used to measure value Lastly, money is all of a country’s coins, currency AND checking account deposits

Objective – Be able to describe the role of money in an economy

Objective – Be able to describe the role of money in an economy The Role of Money is to . . . A.) Act as a medium (method) of exchange * For example, Instead of an artist giving a grocer a sculpture in exchange for milk, he can give money

Objective – Be able to describe the role of money in an economy The Role of Money is to . . . B.) Encourage specialization * For example, instead of trying to do everything someone needs to do to just live, I can focus on just one job and use the money I receive from that job to buy what I need

Objective – Be able to describe the role of money in an economy The Role of Money is to . . . C.) Act as a “store” (holder) of value * For example, we can put money in something (a bank or an investment) and it’ll be worth something down the road. A house I buy now and want to sell in 20 years.

Objective – Be able to describe the role of money in an economy The Role of Money is to . . . D.) Act as a measure of value * For example, when discussing a trade (barter) with someone, we can refer to the number of dollars something is worth in comparison (ex: Pokémon Cards).

Objective – Be able to describe the role of money in an economy The Role of Money is to . . . E.) Be a commodity all by itself * For example, if you were stuck on an island, you and the other survivors might use coconuts as money for trade (instead of eating them).

Objective – Be able to describe the role of money in an economy The Role of Money is to . . . F.) Be a “Fiat” (Government decree) * For example, By “Fiat,” Big Daddy on the Island Kingdom of Mocha decreed clams to be the island’s currency.

Objective – Be able to describe the role of banks in our economy

Objective – Be able to describe the role of banks in our economy Financial market places (banks) bring people together who have money to lend and are willing to take risks to earn a return with people who want to borrow for a specific purpose

Be able to define the terms associated with international trade
OBJECTIVE Be able to define the terms associated with international trade

HOMEWORK

International Trade Imports - Goods & services brought into the country Exports - Goods & services sent out of the country Balance of Trade - The difference between a country’s imports & exports

International Trade Tariff - A tax put on goods & services brought into a country Quota - A limit on the number of goods & services that can be brought into a country

International Trade Embargo - The banning of sales of goods & services from a specific country.

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