1. Have you ever thought that a pizza is the result of economic decisions?

2. Meet Marco
Hey class!

3. Marco made a choice to open a pizza business.

4. He has decided to use his money, his business skills and his momma’s secret recipe to produce a popular food

5. What other choices will Marco make daily to produce his pizza and run his restaurant?

6. What ingredients should be used. how many pizzas to make in a day
What ingredients should be used? how many pizzas to make in a day? How much should he charge? how many people should he hire to make the pizzas and serve them to customers? Will more pizzas sell if we deliver?

7. This is an economy!! Marco PRODUCES pizza, DISTRIBUTES his pizza at the restaurant and through a delivery service and his customers pay $ to CONSUME (eat) a good they want

8. The economy of a country like the United States works the same way, just on a larger scale

9. Private citizens and the government own resources and choose how they are used to meet people’s wants and needs

10. 7.2 What role does scarcity play in making economic decisions?

11. Economics is based on
The fact that people are forced to make choices about how to meet their unlimited wants and needs

12. The problem is resources are limited.
All economic decisions are based on how to use limited available resources.
This is known as SCARCITY

14. Scarcity Causes producers and consumers to make choices
Make this or that…
Buy 5 of these or 1 of those…

15. Economic choices involve costs
When an economic choice is made, other options are not picked.
These are the costs
If you choose to buy shoes instead of a T-shirt what are the costs??

16. The next best option that was not picked is the opportunity cost

17. Opportunity Cost Example
You’re hungry and can decide to eat tacos, pizza, or salad.
You do not like lettuce so salad is out
You really like tacos, but had Mexican yesterday
You choose Pizza
What is the opportunity Cost???

19. Incentives Because choices involve costs,
People look for the “benefits” of making a choice

20. benefits that motivate a choice are known as Incentives

21. Incentives This is cheaper than that I could make more Profit Buy 1 get 1 free!!!

22. To deal with the issue of scarcity, people in any economy face four basic economic decisions.

23. The 4 Basic Economic Questions
Obj. 7.1
The 4 Basic Economic Questions

24. All economies must answer 4 basic questions

25. What to Produce? (production)

26. 2. How to Produce?

27. 3. How many to produce? (consumption)

28. 4. For Whom? (distribution)

29. What is Produced? (production)

30. In any economy people have to decide what to produce with the scarce resources they have.

31. This decision depends on: needs and wants of the people

32. 2. How are goods Produced?

33. This decision depends on: the amount of resources available

34. Resources
Any item used to produce, distribute or consume goods and services

35. 3. How many to produce? (consumption)

36. How much to produce is determined by supply and demand.

37. Supply 1.Based on resources available and want/need
2.How much should be produced?

38. Demand
The How much do people want your good or service

39. 4. For Whom? (distribution)

40. People must find a way to decide how the goods or service will be given out

41. Is the good/service -exchanged for money. -Traded for another g/s
Is the good/service -exchanged for money? -Traded for another g/s? -sold direct to customer? -Delivered? air, sea, land?

42. The answers to these 4 questions make the foundation of every economy

43. Identify the factors of production
Objective 7.3
Identify the factors of production
When answering these 4 economic questions, people must consider what RESOURCES are available and what resources are scarce

44. It is the availability of resources that drives all economic choices

45. A Resource is…
any good or service needed to produce other goods or services
In economics, resources are called Factors of Production

46. factors of production=
The resources used in production
There are 3 types of factors of production
Natural - Human - Capital

47. factors of production= Resources!!

48. NATURAL RESOURCES
Materials from the earth used for production
Mostly non-renewable

49. Lumber (wood) *Cotton Metals *Leather Oil *seeds Land Animal fur
What examples of Natural resources can you think of??
Lumber (wood) *Cotton
Metals *Leather
Oil *seeds
Land
Animal fur

50. Human resources (workers)
The people involved in the process of production

51. Human resources (workers) 3 types
Entrepreneur- The person that starts a business to produce a G/S
Management: leads production process & assigns tasks to workers
Labor (Workers) – Uses their skills to produce

52. Other essential resources needed for the production process
CAPITAL RESOURCES
Other essential resources needed for the production process
There are 2 types of capital

53. CAPITAL RESOURCES There are 2 types of capital
FINANCIAL CAPITAL:
$$MONEY$$ needed for production
CAPITAL GOODS:
Machines, Tools, Buildings, factories, land (all necessary for production)