1. Bell Ringer
Generate a list of ten things that come to mind when you hear the word “Economics”

2. What is Economics?

3. Goods and Services
Before getting into the definition of economics, you must have some basic understanding of the difference between a good and a service.

4. Goods and Services
A “good” is something that is tangible that satisfies people’s wants and desires
A “service” is something that is intangible that satisfies people’s wants and desires

5. Goods and Services

6. Wants and Desires
Now you know the difference between a good and a service, and know the difference between tangible and intangible, what are the wants and desires of all individuals??

7. OUR WANTS ARE UNLIMITED!
WE WANT EVERYTHING!!!
OUR WANTS ARE UNLIMITED!

8. Wants and Desires
We want food, we want water, we want good grades, we want a haircut, we want money, we want more money, we want a home, we want groceries, we want furniture, we want a car, we want a relationship, we want happiness, we want children, we want to breathe one more breath, we want, we want, we want…
The list is endless.

9. Definition of Economics
So… what is the definition of economics?
“Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”
Great. Sooo… what does that mean?

10. Definition of Economics
“Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

11. Definition of Economics
“Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

12. Scarcity What does it mean when something is scarce?
There is a limited amount of it.
All resources are limited.
It’s as if there’s a constant fight between our unlimited wants and our limited resources.

13. Scarcity
When our unlimited wants come up against our limited resources, there is always a cost.
This cost can be more than monetary…
There are social costs, emotional costs, health costs, etc.
Nothing(!) on Earth is “free”
“There’s no such thing as a free lunch.”

14. Definition of Economics
Economics = Scarcity
Scarcity = Wants > Available Resources
Therefore…
Economics = Wants > Available Resources

15. Definition of Economics
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16. Review
Create a definition of economics in exactly 20 words.

17. Bell Ringer Goods are _________ ; services are __________
Wants are __________; resources are __________
Economics = ________ > __________

18. Objectives Define the four types of resources.
Explain why every decision involves trade-offs.
Summarize the concept of opportunity cost.
Describe what economist Milton Friedman meant when he said “There’s no such thing as a free lunch.”

19. Types of Resources 1. Land
Land is a scarce resource because there’s a limited amount of it.
In economics, land means any natural resource within, on, or above the earth.
Examples??
Air, water, raw materials

20. Types of Resources 2. Labor
Labor is a scarce resource because there’s only so many people willing and able to do certain jobs.

21. Types of Resources 3. Capital
In economics, capital refers to a physical item used in the production process.
Examples??
Capital is a scarce resource because there are a limited number of factories, machines, etc., and only a certain number of people that can afford them.
When you think capital, think…

22. Factories!

23. Types of Resources 4. Entrepreneurship
An entrepreneur is an individual who is willing to take a risk to start a business.
Why are entrepreneurs a scarce resource?
Because there are a limited number of individuals that want to start their own business.

24. Trade Offs & Opportunity Cost
What did you give up in order to come to school this morning?
In other words, what else could you be doing with your time?

25. Trade Off
A trade off is an exchange for one thing in return for another.
All decisions require trading one goal for another.
Let’s say you’re going to go out on Friday night. You have lots of choices of what you can do…

26. Trade Off
Go out with your friends.
Stay home and watch TV.
Go on a date.
Review your economics notes.
Go to a movie with your parents.
All of these choices, except the one you choose, are your possible trade offs.

27. Go on a date. Trade Off What is one trade off of going on a date?
Go out with your friends.
Stay home and watch TV.
Go on a date.
Review your economics notes.
Go to a movie with your parents.
What is one trade off of going on a date?

28. Trade Off
Go out with your friends.
Stay home and watch TV.
Go on a date.
Review your economics notes.
Go to a movie with your parents.
Let’s say your second choice is to go out with your friends. If so, then this is the trade off of going on a date.

29. Go on a date. Opportunity Cost
Go out with your friends.
Stay home and watch TV.
Go on a date.
Review your economics notes.
Go to a movie with your parents.
In economics, we call the value of the next best alternative the opportunity cost.

30. Go on a date. Opportunity Cost
Go out with your friends.
Stay home and watch TV.
Go on a date.
Review your economics notes.
Go to a movie with your parents.
A simpler definition of opportunity cost is the cost of making a decision.

31. Go on a date. Opportunity Cost Go out with your friends.
Stay home and watch TV.
Go on a date.
Review your economics notes.
Go to a movie with your parents.
You are giving up the chance to hang out with your friends in the hopes of at least getting the same value from going on your date in terms of excitement and camaraderie… if you know what I mean.

32. Opportunity Cost But what is the actual cost of going on your date?
Remember that cost means more than just monetary cost!!
With an elbow partner, come up with some other costs for choosing to go on a date instead of going out with your friends.

33. Opportunity Cost Monetary cost Time cost Social cost Emotional cost
Health cost
There’s no such thing as a free lunch!

34. Review
A trade off is the thing(s) you give up to get one thing in return for another.
Opportunity cost is the value or cost of this decision.

35. Review
Pg. 7, Questions #2 & 9
For #9… “factors of production” = scarce resources

36. Bell Ringer
List five things that were a trade-off for coming to school today.
For one of your trade-offs, identify the opportunity cost.

37. Objectives
Explain how the phrase “guns or butter” relates to trade-offs and opportunity cost.
Describe the difference between “efficiency” and “underutilization”

38. “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed.”
-President Dwight D. Eisenhower
How does this quote relate
to the economic concepts of
trade-offs and opportunity cost?

39. Guns or Butter How does a nation decide what and how to produce?
The idea that a country that decides to produce more military goods (“guns”) has fewer resources to produce consumer goods (“butter”), and vice versa.

41. Efficiency vs. Underutilization
National economies (and individual people) try to make the most of their available resources.
When an economy utilizes its resources well, it is said to be efficient. If it does not, it can run the risk of underutilization.

42. Efficiency vs. Underutilization
Efficiency is where an economy uses its resources in a way that maximizes the output of goods and services
Underutilization is where an economy uses fewer resources than it is capable of using

43. Review
Working with an elbow partner, come up with a specific example of a “guns or butter” decision on the local, national, or global level.

45. Assignment Go to page 21 in the textbook.
Working with a partner or on your own, read “Should the federal government spend money on space exploration?”
Read the three documents at the top of the page and answer questions 1-3.
Then, compose a paragraph (5-7 sentences) answering the following question:
Should the federal government spend money on space exploration? Why/why not?

46. What trade-offs did the young man make that helped him get seniority?
What was the opportunity cost?

47. Crash Course Econ
“Intro to Economics” - =3ez10ADR_gM