1. Section 1 Basic/Fundamental Economic Concepts Modules 1-4
Nancy K. Ware
Gainesville High School
AP Macroeconomics

2. MODULE 1 The Study of Economics

3. Module 1: The Study of Economics
What is Economics?
Study of Scarcity & Choice ~Individual Choice is the CORE of Economics
With a partner: make a list of your basic everyday needs and your wants. Choose which ones you want fulfilled everyday. What supplies these things?
Why can’t you have everything you want and need?
Scarcity!!!

4. What is the Economy Anyway?
System of coordinating a society’s productive and consumptive activities…in other words…a market
Are there different types of markets? Would you go to a car dealership and buy mangos?
Market Economy: production and consumption are decided mainly by the producer and consumer, not the gov’t (NOT THE GOV’T)
Command Economy: (on the other end of the economic spectrum) a central authority makes the economic decisions in the economy
Examples of Market? - Examples of Command
USA!!! ~ China
Great Britain ~ Russia
Japan ~ Venezuela

5. Issues with Command Economies
Lack of INCENTIVES. Ok what’s an incentive? Video Clip 
What motivates you???
Property rights establish ownership & give people the right to trade their property or goods for a profit
This is the INCENTIVE Commands economies lack
Marginal: how much more OR less are you going to do?
Marginal Benefit vs. Marginal cost plays a key role in all economies

6. Renewable versus Non-renewable
EF1b: Define and give examples of productive resources (e.g. land (natural), labor (human), capital (capital goods), and entrepreneurship (human intellect & money)
Resource: What is it?
Land
Labor
Capital
Entrepreneurship
Renewable versus Non-renewable

7. EF1c: List a variety of strategies for allocating scarce resources
Strategy
Oil
Water
Gasoline
Trees
Meat (chicken, beef, fish)

8. EF1c: List a variety of strategies for allocating scarce resources
Strategy
Oil
High prices
Water
Watering bans, odd-even days
Gasoline
rationing
Trees
Conservation areas
Meat (chicken, beef, fish)
Rationing (WWII)

9. Macro vs. Micro What’s the difference?
Microeconomics: What is it?
How individuals make decisions and interact…in other words the smaller parts that make up the whole
Macroeconomics: What is it?
The big picture or the overall ups and downs of the economy as a whole

10. Positive vs. Normative Economics
How the economy actually works; describing the economy
Normative:
How the economy should work; prescription not description; more than one answer depending on who you ask

11. HW: Module 1 Review Questions p.8
Activity: Build A Zoo!
Section 1 Build A Zoo! Module 1
An activity to reinforce scarcity, cost vs. benefit, marginal analysis, opportunity cost
Group ~ Names ______________________________________________________________________Date____________________
Break into groups of 4
You have 20 acres to use & each exhibit takes up a certain number of acres.
Select your exhibits and be prepared to explain why you chose what you did. Use the back if necessary.
Why did you not choose every type of exhibit? (scarcity)
Why did you choose one exhibit over the other? (cost v. benefit)
What was the last exhibit to make the cut? (marginal analysis)
Elephants 3 acres
Howler monkeys .5 acre
Lions 1 acre
Grizzly bears 1.5 acres
Polar Bears 1.5 acres
Reptile house 1 acre
Tigers 1 acre
Orangutans 1 acre
Giraffes 2 acre
Hippos .5 acre
Ostriches .5 acre
Playground .25 acre
Zebras 1 acre
Gorillas 2 acres
Llamas 1 acre
White rhinos 1 acre
Kangaroo .5 acre
Lake with waterfowl and flamingos 3 acres
Petting zoo .5 acre
Picnic area 1 acre
Gift shop .25 acre
Wolves 2 acres
Jaguar .5 acre
Restaurant .5 acre
Insect exhibit .25 acre
Climbing wall .5 acre
HW: Module 1 Review Questions p.8