1. AGENDA
Turn in your homework (signed syllabus and getting to know you sheet)
Last day to do this for full credit!
Today: intro to economics – scarcity, needs, wants, costs
Homework: none

2. INTRO TO ECONOMICS

3. Who wants candy? Who wants one of these?
“Is there enough for everyone?” No – scarcity
“how should we allocate?”

4. Who wants candy?
How did we divide up the candy (aka, how did we allocate)?
Why did we allocate it that way?
If I offer to give you something for nothing, is there a cost?
Was the candy bar free?

5. The Basic Rule of Economics

6. THERE IS NO SUCH THING AS A FREE LUNCH
Or, TINSTAAFL

7. TINSTAAFL
What does that mean?

8. QUICK DISCUSSION
Give an example of a supposedly “free” item that you see every day. Explain why the item is not really free by stating who or what actually pays for it.

9. ECONOMICS
The study of how groups or nations allocate their limited (scarce) resources in which to satisfy their unlimited wants and needs.

10. Economics is
The study of how groups or nations allocate their limited (scarce) resources in which to satisfy their unlimited wants and needs.
In other words: we have unlimited wants and needs. There aren’t enough resources to meet those. Economics deals with that problem.

11. Economics is
The study of how groups or nations allocate their limited (scarce) resources in which to satisfy their unlimited wants and needs.
Allocate: the need to make decisions
Limited resources: land, labor, capital, entrepreneurship
Unlimited wants and needs: goods and services

12. Basically… People have wants and needs.
I want a mansion in the mountains.
2. There aren’t enough resources available to satisfy everyone’s wants and needs.
I do not have the money to buy a mansion in the mountains.
3. Economics is the study of how groups of people collectively deal with that.
But, again, economics is not about how a single person acts: it’s about how groups of people act collectively

13. The fundamental economics problem: scarcity
Scarcity: the basic relationship between relatively unlimited wants and limited resources
Unlimited wants + limited resources
In the zoo game: what was your limited resource?
What about in the warm-up?
 Leads to decision making situations at both personal and societal levels.
There aren’t unlimited resources. Resources are scarce. We can’t have everything we want – which leads to (hopefully) smart decision-making.
Now, because we can’t have everything we want, we need to be able to make decisions about what we want..

14. Wants v. Needs
What’s the difference?

15. Want vs. Need

16. QUICK DISCUSSION
Because of scarcity (because resources are limited), everything that we do has a cost…
Think back to building a zoo.. You made decisions because the land was scarce. What were your costs?
What’s the difference between cost and price?
Or, going on a run vs. lesson planning
Or, ordering pizza vs. cooking at home

17. Dream scenario
You were just given $200. How would you spend it? Be specific. Make a list of things you would want to purchase with that $200.

18. Trade-offs
Trade-offs are alternative choices.

19. Opportunity Costs
The most highly valued opportunity or alternative that is forfeited when a choice is made
Aka, The second-best option
Example:
Buying a front-row concert ticket vs. a fancy new pair of shades
What did you consider when you were thinking about spending that $200?
Or, going on a run vs. lesson planning
Or, ordering pizza vs. cooking at home

20. Difference between Opportunity Costs and Trade-offs?
Trade-offs are ALL OPTIONS in a decision. The opportunity cost is the NEXT BEST OPTION.
What are you giving up to get what you want?

21. Economics: The Study of Choices
Scarcity
Trade Offs
Opportunity Cost

22. Trade Offs Choices 1. 2. 3. 1. 4. 2. 5. Your Choice (Benefit)
Top two choices 1. 2.
Opportunity Cost

23. Let’s do another What might you do after school today?
OR – IF THERE’S A LOT OF TIME – START THAT WORKSHEET. OR WAIT FOR THAT FOR TOMORROW.

24. Can you bring it all together?
Exit ticket.
Individually on a half sheet of paper, answer the following question: what is the fundamental problem of economics, and how do people react to that?

25. To sum it up…
You can’t have everything you want in this world, because you don’t have enough resources to satisfy your wants.
This is called scarcity.
Because of this, every decision you make has a cost. You are always forsaking something when you make a decision.
The apartment that I live in. It’s downtown. Why did I choose that? What’s the cost of me being married?

26. BASIC ECONOMIC TRUTHS

27. 1. PEOPLE CHOOSE Resources are limited Needs and wants are unlimited
Everything you do is a choice
Skipping class

28. 1. PEOPLE CHOOSE
It’s 11pm. You have a paper due tomorrow in your 7th period English class that you haven’t started. You also have 50 math problems for homework and a science lab. You don’t like your 1st or 2nd period teachers.
What is the resource?
What are the needs and wants?
What are possible choices?
Skipping class

29. 2. PEOPLE’S CHOICES INVOLVE COSTS
Cost and price are not the same
What’s the difference?
Hold up three different candy bars
“raise your hand if you want one of these”
“are there enough to satisfy everyone’s wants?” no – that’s scarcity
How should I allocate these three candy bars? Based on that, choose a winner.
“did you receive this candy bar for free?” no. why not? I paid for it. Also, the cost of choosing this candy bar is giving up the other two candy bars. Ask kids what is x’s names personal cost?
Same with no 2 – the opportunity cost s the other candy bar. And three – they have no option; they’re giving it up – but I still paid for it.

30. 2. PEOPLE’S CHOICES INVOLVE COSTS
Cost and price are not the same
What’s the difference?
Cost is not always monetary.
It can be services, time, money, what you’re giving up to do something, etc
Price is monetary.
The price of a nice pair of jeans is $100.
Hold up three different candy bars
“raise your hand if you want one of these”
“are there enough to satisfy everyone’s wants?” no – that’s scarcity
How should I allocate these three candy bars? Based on that, choose a winner.
“did you receive this candy bar for free?” no. why not? I paid for it. Also, the cost of choosing this candy bar is giving up the other two candy bars. Ask kids what is x’s names personal cost?
Same with no 2 – the opportunity cost s the other candy bar. And three – they have no option; they’re giving it up – but I still paid for it.

31. It’s 11pm. You have a paper due tomorrow in your 7th period English class that you haven’t started. You also have 50 math problems for homework and a science lab. You don’t like your 1st or 2nd period teachers.
What’s the cost, if:
You pull an all-nighter and get all of your work done.
You skip 1st and 2nd period.
You skip your math homework.
You don’t finish your English paper because you think English is irrelevant.
Skipping class

32. 2. PEOPLE’S CHOICES INVOLVE COSTS
Opportunity cost
The next best alternative
What are you giving up? What is the cost of you giving that up?
What’s the opportunity cost of being in class today?
Hold up three different candy bars
“raise your hand if you want one of these”
“are there enough to satisfy everyone’s wants?” no – that’s scarcity
How should I allocate these three candy bars? Based on that, choose a winner.
“did you receive this candy bar for free?” no. why not? I paid for it. Also, the cost of choosing this candy bar is giving up the other two candy bars. Ask kids what is x’s names personal cost?
Same with no 2 – the opportunity cost s the other candy bar. And three – they have no option; they’re giving it up – but I still paid for it.

33. 3. PEOPLE RESPOND TO INCENTIVES IN PREDICTABLE WAYS
Money
Why is it useful?
Hold up three different candy bars
“raise your hand if you want one of these”
“are there enough to satisfy everyone’s wants?” no – that’s scarcity
How should I allocate these three candy bars? Based on that, choose a winner.
“did you receive this candy bar for free?” no. why not? I paid for it. Also, the cost of choosing this candy bar is giving up the other two candy bars. Ask kids what is x’s names personal cost?
Same with no 2 – the opportunity cost s the other candy bar. And three – they have no option; they’re giving it up – but I still paid for it.

34. 4. PEOPLE CREATE ECONOMIC SYSTEMS THAT INFLUENCE CHOICE AND INCENTIVE
Rules, laws, and prohibitions
Child labor laws
Taxes
Rewards
Hold up three different candy bars
“raise your hand if you want one of these”
“are there enough to satisfy everyone’s wants?” no – that’s scarcity
How should I allocate these three candy bars? Based on that, choose a winner.
“did you receive this candy bar for free?” no. why not? I paid for it. Also, the cost of choosing this candy bar is giving up the other two candy bars. Ask kids what is x’s names personal cost?
Same with no 2 – the opportunity cost s the other candy bar. And three – they have no option; they’re giving it up – but I still paid for it.

35. 5. PEOPLE GAIN WHEN THEY TRADE VOLUNTARILY
Voluntary trade is win-win
It increases wealth!
You drive me to the airport, and you can use my car while I’m gone
People who want to trade create a market
On the flip side…
Involuntary trade decreases wealth
Thievery, slavery
I looooove to cook. Lets say that all of the resources I own are 50 cookbooks. What does a student like to do? Let’s say they only on 50 soccer balls. Those, individually, are useless to both of us. Let’s trade 25 for 25. We now have more resources. We have both increased our wealth. Another student – and we keep sharing and trading.
*ex – petsitting Winnie over the break; me watering her plants while she’s gone for two weeks.

36. 6. PEOPLE’S CHOICES HAVE CONSEQUENCES FOR THE FUTURE
Ex:
Going to college versus not going to college
Marrying someone versus being a bachelorette forever
Saving versus spending