1. n Hi! My name is Stan and today I am going to teach you about economics. Economics is the study of how people choose to use their resources.

2. What are resources? Well there are three kinds of resources: n Natural resources are resources that occur in nature like air, soil, sunshine, water, iron, coal, and oil. Plants and animals are natural resources too. Renewable resources are resources that can be replaced or renewed like wood, plastics, and rubber. Nonrenewable resources are resources that cannot be replaced like oil, iron ore, copper, silver and gold. Once they are taken out of the ground, they cannot grow back or be replaced.

3. What are resources? n Human resources are the people who do labor. They work in many different kinds of jobs. They may make things, or help other people. Your teacher is a human resource. So are cowboys, carpenters, and clerks. Anyone who works is a human resource, but a machine is not a human resource.

4. What are resources? n Capital resources are made by people. They are used by people to make other things. They may also be used to do work or provide a service. Machines, tractors and tools are capital resources. Your school is a capital resource so is the projector your teacher is using to show this presentation.

5. What does barter mean? n These days people usually use money to get what they want. Before there was money, people had to barter to get what they wanted. To barter means “to trade”. In a barter system, items of equal value are exchanged back and forth. n An example of economic trade, or the barter system, is the United States buying oil from Mexico, and Mexico buying cars from the United States!

6. n Some people were good hunters, some were craftsmen, and some were farmers. One person might have traded five rabbits for milk and eggs. Eventually people wanted something smaller to carry around as money. People started using coins, as well as paper money for trade. Want to trade with me?

7. n Yesterday, when I was walking through town, I decided to go to “Bubba’s Ice Cream”. My friend Diana works there. Diana provides a service to me because she serves me ice cream. A service is work done for other people for a fee. The ice cream is a good. Goods are items that people buy, such as a book or a car.. Bubba’s Ice Cream

8. n Look at the pictures on the right. Which of these pictures show goods and which ones show services? 1) 2) 3) 4)

9. n I asked Diana for a double scoop of my favorite kind of ice cream: mint chocolate chip. “I am sorry Stan, we are all out of that flavor”, she said. Disappointed, I settled for vanilla. I’m sorry Stan!

10. What is supply and demand? n The supply of mint chocolate chip ice cream at “Bubba’s” was gone because it was in high demand (wanted) by many customers. Look at the chart on the left to see what flavors are in supply at “Bubba’s Ice Cream”.

11. Let’s Recap: n Supply is how much there is of a good or service. According to the law of supply, when the price of an item goes up, that is a sure incentive for the producer to produce more of that item! n Demand is the demand or willingness of consumers to purchase or want a good or service. n Now I get it!

12. n Diana asked me if I would like my vanilla ice cream in a cup or a cone. I asked for a cone. Diana said I was lucky because there was only one more cone available. The little boy behind me in line wailed, “I wanted my ice cream in a cone!” I told Diana that he could have the last cone, and that I would have mine in a dish with chocolate syrup.

13. n There was a scarcity of cones at Bubba’s. Scarcity means that people want or need more of something than there is, and therefore, people must make choices. Look at the pictures on the right. Which pictures show a scarcity? 1) 2) 3)

14. After I finished my ice cream, I said goodbye to Diana and left. In the street I heard two children singing a song to the tune of “You Are My Sunshine”. It went like this: n “We are consumers! We are consumers! We are so happy when we can shop! We are consuming goods and services, But our wants just will not stop!”

15. I found myself singing along to the tune. When we were finished singing I asked, “Where are you two going?” n The boy, whose name was Andy, answered: “We’ve saved up all our money and today we are going to the toy store! My sister Sara wants to buy either a rabbit or a bike and I want to buy either a basketball net or a skateboard”. Toy Store

16. What are producers and consumers? n The two children in this example are consumers. A consumer is anyone who buys a good or a service. n The toy store owner in this example is a producer. A producer is anyone who makes or grows a good or performs a service.

17. What is opportunity cost? n Andy had $65.00 to spend at the toy store. The basketball net cost $50.00, so he had to buy that instead of the skateboard, which cost $75.00. n Sara had enough money for either the rabbit or the bike. She decided to buy the bike because then she could ride bikes with her friends after school.

18. n Opportunity cost is the sacrifice that is made when a person chooses between two goods or services. The item that you don’t pick is the opportunity cost. The rabbit is Sara’s opportunity cost and the skateboard is Andy’s opportunity cost. Opportunity Costs Purchases

19. What is a profit? n What Andy didn’t realize when he bought his basketball net was that the toy store owner made a large profit off of the sale. The toy store owner spent $30.00 to make the basketball net. Andy bought it for $50.00. The toy store owner made a profit of $20.00. Profit is the money that remains after all the costs of production have been paid.

20. Back in the 1500 and 1600s, some European nations decided to pay for voyages of discover to the Americas in hopes of a profit. In other words, if they shelled out the cost of the voyage, they were hoping that they would get gold or spices in return. Like King Ferdinand of Spain financing Christopher Columbus’s voyages to America. He was hoping Columbus would bring back gold, but unfortunately he brought back nothing but disease.

21. What is a loss? n The toy store owner lost money when Sara purchased the bike. The owner made the bike for $80.00, but sold it to Sara for only $65.00. The toy store owner lost $15.00. A loss is when it costs more to make a good than what you sell the good for.

22. After the children left the toy store I decided to stay and have a look around. In the front of the store there was a magnificent toy car. n “Wow”, I exclaimed, “what a neat car! Did you make it yourself?” The toy store owner explained that it was designed by a car company, put together by Mattel, a toy company, and painted by himself. “Painting is my specialty”, he said.

23. What is specialization? n The toy store owner counted on others to do the necessary work to construct the toys he sold, but then he would paint the toys himself. Specialization is when an individual, a business or even a country chooses to specialize or produce certain items, and relies on others to complete the other parts. People specialize in an economy in order to make more goods and services at a lower cost and earn more money.

24. Specialization dates way back to colonial times when the first thirteen colonies of our nation had to specialize in products that were conducive to where they lived. For example, the southern colonies specialized in cotton and tobacco because they had good soil and plenty of land. In the New England colonies like New York, they specialized in ship- building because they lived so close to the ocean and the shipping industry was a good way to make money.

25. What is productivity? n Productivity is the amount of goods and service that a person or business can produce in any given time span. n Specialization increases productivity.

26. n I said goodbye to the toy store owner and continued on my walk through town. I passed the elementary school as I rounded the corner. Public schools are services provided by the government and paid for by taxes. Johnson Elementary School

27. What are taxes? n Taxes are the money that the government collects from individuals and businesses to pay for public goods and services. n Andy and Sara both paid a 4.5% sales tax when they bought their toys. Andy paid an extra $2.25 in tax, for a total of $52.25. Sara spent $2.93 in sales tax for a total of $67.93. n People also pay an income tax. An income tax is a percentage of money taken out of your income.

28. I passed the school and saw my friend Cole walking down the street. “How are you today?”, I asked Cole. n “I am fantastic! I just thought of a new idea: a bowling ball that expands as you throw it so that it is guaranteed to knock down every pin! I am going to be famous!”

29. What is an entrepreneur? n Cole is an entrepreneur. An entrepreneur is a person who comes up with a product or service, and finds the money and the time to produce this new product.

30. n I wished Cole good luck and continued on my way. On the next two blocks were two popcorn stands. They both lowered their prices!

31. What is voluntary exchange? n The popcorn stands were selling popcorn for.25 cents! A real bargain! So I, the consumer, n purchased the popcorn and gave the salesman my.25 cents. Both of us were willing to make the exchange and were satisfied with our transaction. Voluntary exchange is when two people make an exchange and feel they are better off because of that exchange. Popcorn $0.50--- Now $0.25!

32. What is an incentive? n An incentive is something that encourages a person to take a certain action. For example, you open a lemonade stand for an afternoon. At the end of the afternoon, you calculate your profit from that lemonade stand. After you subtract the cost of your supplies, you made $15.00 dollars profit. That profit is an incentive for you to open up your lemonade stand again to make more money.

33. n This completes my lesson on economics! I hope you enjoyed the tour. Economics is an important part of our lives. Think of all of the ways you use economics everyday! Goodbye!

34. References n Text Information: n Think Quest Junior: “Econopolis” [Online] Available http://tqjunior.advanced.org/3901/ Copyright 1997. Advanced Network and Services, Inc. http://tqjunior.advanced.org/3901/ n Pocket Dictionary for Economics. Available through Virginia Commonwealth Center for Economic Education (no copyright). n The Economic Songbook: Old Tunes with an Economic Twist. “We Are Consumers!” Copyright 1997, Martha C. Hopkins. James Madison University Center for Economic Education. n Graphics Information: n Microsoft Clip Gallery 3.0 n #1 Free Clip Art. [Online Graphics]. Available www.1cli[part.com/ Copyright 1999 #1Free Clip Art