1. Focus Writing #9 What did you buy? 1.Write down 3-5 things you purchased in the last week or so. Identify a decision you made for each purchase. Please turn in focus writing #8

2. Learning Targets Explain what economics means Explain what the economic problem is Explain opportunity costs Remember – Friday, last day of quarter, HW due on Monday

3. Economics Brainstorm Economic Notes handout Write down five questions or statements that you think have something to do with economics.

4. What is Economics? Economics is a social science that studies: How individuals, governments, and businesses make decisions Choices of how to get the most from limited resources The consequences of those choices

5. The Economic Problem Unlimited Needs & Wants Limited Resources WHAT to produce HOW to produce FOR WHOM to produce Scarcity Choices

6. The Economic Problem 1.What goods and services should an economy produce? –should the emphasis be on agriculture, manufacturing or services, should it be on education, prisons, or housing? 2.How should goods and services be produced? –labor intensive, land intensive, capital intensive? Efficiency? 3.Who should get the goods and services produced? –even distribution? more for the rich? more for those who work hard?

7. Opportunity Cost Definition – the cost expressed in terms of the next best alternative sacrificed (tradeoffs) Helps us view the true cost of decision making Implies valuing different choices Model with Production Possibilities Frontier

8. Production Possibility Frontiers Cars Bicycles Y1 X1 A B Y2 X2 Assume a country can produce two types of goods with its resources – capital goods and consumer goods If it devotes all resources to capital goods it could produce a maximum of Ym. If it devotes all its resources to consumer goods it could produce a maximum of Xm Ym Xm If the country is at point A on the PPF It can produce the combination of Yo capital goods and Xo consumer goods If it reallocates its resources (moving round the PPF from A to B) it can produce more consumer goods but only at the expense of fewer capital goods. The opportunity cost of producing an extra Xo – X1 consumer goods is Yo – Y1 capital goods.

9. Production Possibility Frontiers Show the different combinations of goods and services that can be produced with a given amount of resources No ‘ideal’ point on the curve Any point inside the curve –resources are not being utilised efficiently Any point outside the curve – not attainable with the current level of resources Useful to demonstrate economic growth and opportunity cost

10. Hospital PPF MRI’s Emergency Room Services Yo Xo A.B.B C Y1 X1 Production inside the PPF – e.g. point B means the country is not using all its resources It can only produce at points outside the PPF if it finds a way of expanding its resources or improves the productivity of those resources it already has. This will push the PPF further outwards.

11. Choices and Alternatives Scarcity requires us to choose between alternatives Resource: $15 What to spend it on? Alternatives: CD vs. Pizza Choice or Alternative CostBenefit CDAbout $15staying awake during Mr. Scott’s lectures (by listening to good music) PizzaAbout $15A delicious meal, yum

12. Exit Question On your focus writing page How does economics affect you? List some specific examples from today’s lesson or from the rest of your life.