2. Mini Lesson 1

3.  Resources  All the things people can use to make goods (products) ▪ Goods include: food, clothing, houses, furniture, cars, computers, etc.  Most resources are limited, scarce  Allocate  to distribute

4.  Trade-off  people gain something, but they also give up something  The thing you give up by making a choice is called the opportunity cost ▪ Always marginal benefits to be greater than marginal cost ▪ Value of the next best alternative you could have chosen (given up)  Economics  Study of how and why people make choices about the allocation, or distribution, of resources

5.  Land (natural)  Not only the land itself, but all the natural resources of the land, as well as any improvements people have made to the land  Capital  Physical Capital ▪ All the tools, machines, and other equipment a business needs  Human Capital ▪ Skills and knowledge of a company’s workers  Labor  Process of making things, the mental & physical efforts of human workers  Entrepreneur  Person who starts and manages a business

6. Mini Lesson 2

7.  Rational Decisions  Cost-benefit analysis ▪ Marginal benefit ▪ What you gain from decision ▪ Marginal Cost ▪ What you give up from the decision  MB > MC = you have made a rational decision

8.  Voluntary exchange  Mutual agreement between different parties  Specialization  Doing just 1 thing (1 job, producing 1 item, selling 1 product)  Productivity  Efficient use of resources  Division of Labor  Different workers do different parts of the job making

9. Mini Lesson 3

10.  What should we produce?  How should we produce it?  For whom should we produce it?

11.  Command Economies  The government makes all basic decisions  Doomed to fail because ▪ Can 1 committee do it all? NO ▪ Inefficient ▪ Shortages & resources were wasted

12.  Market Economies  Based on private ownership ▪ Private individuals & companies control the resources ▪ Supply & Demand ▪ Shows the distribution of goods & services determined by prices  Competition is driving force ▪ Consumers—people who buy things & compete to buy scarce products ▪ Producers—people who sell things & compete to sell the products people want most, driving down prices.  AKA Capitalist or Laissez-faire ▪ French word that means “to leave alone” ▪ Government does not interfere with free markets

13.  Mixed Economies  Most economies are based on various combinations of market forces & government interventions

14. Mini Lesson 4

15. 1) Protecting Property Rights & Contracts  Legal rights of producers & consumers must be protected  Exchange of goods & services depends on contracts, legal documents, between buyers & sellers  Government protects ▪ Ideas, intellectual property ▪ Patents for new inventions and medicines ▪ Copyrights for books, songs, and creative works

16. 2) Providing Public Goods & Services  Private Goods ▪ When you pay the entire cost of a good/service and you receive all the benefits  Public Good ▪ When you pay taxes on a good/service and the benefits are shared by everyone in society

17. 3) Redistributing Income  Transfer payments ▪ money payments made by governments for which no services are required in return ▪ Done by collecting taxes from wealthy citizens to make transfer payments to poor, disabled, and elderly citizens ▪ Examples: ▪ Welfare benefits in cash, food stamps, low-income housing, Medicaid benefits, unemployment benefits, Social Security retirement benefits, Medicare

18. 4) Promoting Competition  Free competition between producers keep prices low and quality high  Congress has passed antitrust laws (laws that prevent the formation of monopolies) ▪ Monopoly market structure in which one company has control over production and prices ▪ Trust is a group of companies that combine their resources in order to control production & prices. ▪ Been illegal in the US since 1890

19. 5) Resolving Market Failures  Market failure occurs when a private company benefits from production for which other people end up paying some of the costs 6) Effects of Regulation & Deregulation  Regulation—using laws to control what businesses can do ▪ Purpose: to increase public benefit & decrease negative consequences of market system  Deregulation—when government stop regulating a particular industry

20. Mini Lesson 5

21.  Occurs when a society is able to produce more things that people want & improve its members’ standard of living  In order for an economy to grow, it must increase its productivity by producing more output (products) per each unit of resources they use, or their input  Productivity = output of products input of resources

22.  Key to economic growth is capital investment  Using some of an economy’s profits to: ▪ buy new machines and equipment ▪ to research and implement new technologies ▪ Improve education of the workplace

23.  To increase productivity and profits in the future  Invest in capital goods (new equipment) or human capital (more training)

24.  PPC on board