1. Did you know? As you watch the video, make a mental note of one of the facts. How does it effect the economy? We will discuss this! Did you know?

2. Real Life Economics 5 minutes Play as many games of Rock-Paper- Scissors –Winner earns candy of choice –Winners continue playing into you have the desired candy (or none at all) Why did we do this?

3. Introductions Interview your partner –Name –Best thing about being a senior –Post high school plans –Preferred superpower—Fly OR Be invisible Return to Your Seat Introduce Your Partner to the Class

4. 01 Limits, Alternatives, and Choices McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

5. What is Macroeconomics? Quick definition of Macroeconomics

6. LO1 Introduction Economics defined: Economic wants exceed productive capacity. A social science concerned with making optimal choices under conditions of scarcity. 1-6

7. LO1 The Economic Perspective Thinking like an economist Key features: Scarcity and choice Purposeful behavior Marginal analysis 1-7

8. LO1 Scarcity and Choice Resources are scarce Choices must be made Opportunity cost There’s no free lunch 1-8

9. LO1 Purposeful Behavior Rational self-interest Individuals and utility Firms and profit Desired outcomes 1-9

10. LO1 Marginal Analysis Marginal benefit Marginal cost Marginal means “extra” Comparison between marginal benefit and marginal cost 1-10

11. LO2 Theories, Principles, and Models The scientific method: Economic principles Generalizations Other-things-equal assumption – ceteris paribus Graphical expression Observe Formulate a hypothesisTest the hypothesis Accept, reject, or modify the hypothesis Continue to test the hypothesis, if necessary 1-11

12. LO3 Microeconomics and Macroeconomics Microeconomics Decision making by individual units Macroeconomics Aggregate 1-12

13. LO3 Positive and Normative Economics Positive economics- Deals with economic facts The rising price of crude oil on world markets will lead to an increase in cycling to work Normative economics - A subjective perspective of the economy Unemployment is more harmful than inflation 1-13

14. LO4 Society’s Economizing Problem Scarce resources Land Labor Capital Entrepreneurial Ability 1-14

15. LO4 Society’s Economizing Problem Entrepreneurial ability Takes initiative Makes decisions Innovates Takes risk Entrepreneurs 1-15

16. LO5 Production Possibilities Model Illustrates production choices Assumptions: Full employment Fixed resources Fixed technology Two goods PPC video 1-16

17. LO5 Production Possibilities Table Type of Product Pizzas (in hundred thousands) Industrial Robots (in thousands) Production Alternatives ABCDE 109740 01234 Plot the Points to Create the Graph… 1-17

18. LO5 Production Possibilities Curve The law of increasing opportunity costs makes the PPC concave. 1-18 Pizzas Industrial Robots Attainable 0 1 2 3 4 5 6 7 8 9 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Unattainable A B C D E U

19. Optimal Allocation LO5 a b c d e MB = MC MC MB 15 10 5 0 1 2 3 Quantity of Pizza Marginal Benefit & Marginal Cost 1-19

20. LO6 A Growing Economy Causes of Economic Growth More resources Improved resource quality Technological advances International trade – it leads to specialization 1-20

21. Type of Product Pizzas (in hundred thousands) Industrial Robots (in thousands) Production Alternatives A'A'B'C'D'E' 1412950 02468 A Growing Economy LO6 1-21

22. LO6 A Growing Economy Pizzas Industrial Robots Attainable 0 1 2 3 4 5 6 7 8 9 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Unattainable A B C D E Economic Growth Now Attainable A’ B’ C’ D’ E’ 1-22

23. LO6 Present Choices, Future Possibilities Goods for the Present Goods for the Future Goods for the Present P F Current Curve Current Curve Future Curve Future Curve Presentville Futureville 1-23