1. Warm-Up Remember that there is a quiz tomorrow over basic procedures!
1. What percentage of your grade is your notebook worth?
2. When do you need to have 3 ring binder at school?
3. Name two important parts of the dress code.
4. When are you considered tardy for class?
5. What is the class motto?

3. Today’s Standards
SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments.
a. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.
d. Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity by making choices. These are not monetary choices.

4. The Choice is Yours!
Because of scarcity, each day we have to make choices, and those choices incur a cost. That is, we have to give something up. In economics, we call these trade-offs. In this activity you will be making "life decisions" by deciding if the benefit of that decision outweighs the cost.

6. Instructions
Record which option you choose and then identify benefits and costs (disadvantages) to each decision you have made on your handout.

7. Choice #1: Vehicles Corner 1: SUV Corner 2: motorcycle Corner 3: car
Corner 4: alternative mode of transportation (hybrid, bus, taxi, bicycle)

8. Choice #2: Housing Corner 1: apartment Corner 2: single family house
Corner 3: condo
Corner 4: non-traditional (houseboat, RV, trailer, motorhome)

9. Choice #3: Future Education
Corner 1: On the job training for a high-paying trade like plumbing, automotive, computers, etc
Corner 2: Join the military which will eventually pay for my college tuition
Corner 3: Definitely a four year college right away
Corner 4: Forget school, I’m starting my own business.

10. Choice #4: Job Stress
Corner 1: Position with moderate responsibility, but making mistakes doesn’t really hurt anyone
Corner 2: High level of responsibility, you are indispensable and mistakes could be life-threatening
Corner 3: Self-employed; if you don’t work, you only hurt yourself
Corner 4: Low-level responsibility; when you are on vacation no one really notices you are gone

11. Opportunity Cost
An opportunity cost is the next best thing, or most desirable alternative given up when you make a decision. Go back through the options and decide which would be your opportunity cost for each choice.

12. Agenda Today you will: Generate a list of benefits with a partner.
Take notes on specialization and gains from trade and incentives.
Analyze the relationship between five activities and the incentives that caused them to happen.
Analyze the text by reading a selection and completing an RUR and writing activity about specialization.
Learn and utilize the SQ3R literacy strategy.
Show what you know by completing the closing vocabulary close activity.

13. Today’s Standards
SSEF1: Explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and trade offs for individuals, businesses, and governments
A. define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.

14. Four Economic Themes The Four Economic Themes: 1. Gain from trade
2. Incentives
3. Interdependence
4. Scarcity

15. Gain from Trade
Gains from trade: means that people trade things when it is mutually beneficial.

16. Gain from Trade People trade voluntarily when they expect to gain.
Voluntary exchange is when people enter into trade for mutual benefit.
A voluntary exchange is done willingly.
Households and firms participate in voluntary exchanges in order to increase their personal satisfaction.

17. An Example of Voluntary Exchange
After school yesterday I went to McDonald’s and bought a Big Mac. I received my hamburger (which increased my personal satisfaction) and in exchange McDonald's received money (which increased their satisfaction). I made voluntary exchange and we both gained what you wanted and increased our personal satisfaction.
The hamburger increased my personal satisfaction! It was delicious!
My money increased McDonalds’ satisfaction!

18. An Example of Voluntary Exchange
Both parties gain as a result of voluntary, non-fraudulent exchange!!
The hamburger increased my personal satisfaction! It was delicious!
My money increased McDonalds’ satisfaction!

19. Discussion Describe a recent voluntary exchange you made.
How did the exchange increase your personal satisfaction?
Is there any exchanges where both parties do not benefit?

20. Specialization & Exchanges
Oftentimes we must exchange because of specialization.
•Specialization is the concentration of the productive efforts of individuals and firms on a limited number of activities. Specialization makes societies more efficient and productive.

21. More Specialization Specialization causes the need for trade.
Since people have specialized jobs that they focus their productive efforts on, they have to trade for things that can’t be produced on their own.
Since I decided that specialize in education, that means that I must engage in voluntary exchange to get other things that I need.

22. Think about it… You are specializing as a student right now so…
… how do you get your clothes?
…how do you get your food?

23. Incentives What is an incentive?
How did I get you you to answer questions earlier ?

24. NO: There is no substitute for Dr. Pepper

25. Incentives
Incentive: an expectation that encourages people to behave in a predictable way
Parties respond predictably to positive and negative incentives.
For example:
If you offered your little brother or sister five dollars to be quiet how do you predict they would respond?
If a teacher offered to buy pizza for anyone who passed a test how do you predict that students would respond?

26. Positive vs. Negative Incentives
positive incentive: reward. If I get an A in this class, my transcript will look good and I will get into a great college.
negative incentive: punishment. If I don't get an A in this class, my parents will take away my cell phone.

27. Discussion
What was your incentive to come to school today?

28. Discussion
Can you tell when a sales clerk works on a commission basis?
Do people who work for tips behave differently from those who do not?
How do tips or commissions serve as positive incentives for these workers?

29. Discussion
What incentives might help to explain why consumers support abusive “sweatshop” manufacturing operations?
Can you think of any other examples of outwardly inappropriate behavior that is explained by underlying incentives.

30. Interdependence Interdependency: we depend on each other
Interdependency: A decision made by one party has intended and unintended consequences on other parties. .

31. Interdependency
When you make a decision to drive an SUV, you may be causing pollution and other environmental problems in other parts of the country. Your decision can cost other regions health problems and money used in cleaning up acid rain damage.

32. Work Period
On a note card identify one incentive that explains the following behavior and explain if it is a positive or negative incentive.
1. You see a police car watching traffic on Cedar Shoals Drive so you slow down and obey the speed limit.
2. You get up in the morning and go to work.
3. You study for a test.
4. An entrepreneur decides to start their own restaurant.
5. The CEO of a company decides to lay off 20% of their workers.

33. Work Period Continued RUR (Read, Understand, Respond): Specialization
Pre-reading guide: Discuss the following questions.
1. What does it mean to be productive?
2. Based on your notes for today what kind of jobs do you know of that are highly specialized?
Literacy Strategy: SQ3R

34. SQ3R Before you read: Survey
a. What is the main idea of this selection? What words are in bold? Do you understand them? How many questions do you have to answer?
Question
a. Read the questions that you will have to answer. What do you already know? What don’t you know?

35. SQ3R
While you Read
1. Read
a. Look for the answers to the questions. Note the important words.
2. Recite
a. When you find an answer re-read it and repeat it to yourself while you write it down.
3. Review
a. Review your answers to see if they answer the question. Re-read the important parts of the text to make sure you understand it.

36. Closure: Incentives make behavior _________________.
Specialization makes and economy more _____________ and ____________.
A positive incentive is like a ____________, while a negative incentive is like a _____________.
Specialization leads to the need for ______________.

37. Closure: Incentives make behavior predictable.
Specialization makes and economy more efficient and productive.
A positive incentive is like a reward, while a negative incentive is like a punishment.
Specialization leads to the need for trade.