1. Economics

2. “There’s no such thing as a free lunch.”
Do Now: What do you think this quote means?
“There’s no such thing as a free lunch.”

3. 1) Everything has a cost to it 2) The cost can come from you or someone else 3) The cost can be money, time, and the things you are NOT getting

4. What is Economics?
The study of how people satisfy their needs and wants through the choices that they make
Study of the production and consumption of goods and services
Includes: jobs/employment
trade
business/commerce
money (and how it is spent)

5. Needs vs. Wants
Need – basic requirement for survival Needs can also be immaterial (love, acceptance, success)

6. Want – a means of expressing a need (Ex
Want – a means of expressing a need (Ex. Food is a need, Pizza is a want) EVERYTHING ELSE that is not a need (ex: cell phones, cars) Often, wants are advertised as needs (we think that our wants are things we need)

7. Is it a Need or a Want?

8. Resources However, there are a limited amount of resources available
Goods – something that can be touched
Services – work performed
However, there are a limited amount of resources available

9. The Basic Economic Problem
Unlimited Wants
Limited Resources
SCARCITY

10. Scarcity
Because of scarcity, people must make choices on how to spend/distribute resources
WHAT to use the resources for
HOW to use the resources
WHO will have the resources

11. If you had a 25th hour, what would you do?
1st Choice
2nd Choice
All other choices

12. Opportunity Cost What you are giving up (the cost of the opportunity)
The value of the runner-up, the second choice
It can be both positive and negative
1st Choice
2nd Choice
All other choices
Opportunity Cost

13. Ex. You have $300 =
(Opportunity Cost)

14. 1st Choice 2nd Choice All other choices Trade-off
All other choices are called trade offs
1st Choice
2nd Choice
All other choices
Trade-off

15. H.W.
Needs v. Wants & Opportunity Cost

16. Day 2: Do Now Three choices Which one would you pick and why
What is your 2nd and 3rd choice
What is your trade off?
What is your opportunity cost?

17. Resources We HAVE to make choices because of scarce resources!!!
The biggest problem is SCARCITY!!!!
Therefore- We have to figure out how to delegate our resources according to needs and wants!!

18. “Factors of Production”
Something that is used to produce and distribute goods and services When all three are present, PRODUCTION can occur

19. Land - space/area - natural resources (wood, coal, oil)
- limited supply

20. Labor - people to work/human resources
- can vary through quantity of people
and quality of workers

21. Capital - something used for production
Physical Capital: man-made resources used
(tools, factories, machines)
Human Capital: Knowledge, skills
and abilities workers gain through
education and experience

22. Physical
Capital
Human

23. 4) Entrepreneurship
- leaders who decide how to combine Land, Labor and Capital to make new or innovative goods and services
- take risks to start new companies and develop new ideas
- Invest their time and money to help the economy grow

24. Day 3: Monsters INC
Complete worksheet on Factors of Production

25. Supply & Demand

26. The most important factor you consider before you buy a good or service PRICE

27. Consumer (buyer): users of goods/services Producer (supplier, seller): create, market, and sell goods and services Market: The place where consumers and producers meet to determine the price of g/s and the amount of g/s that will be supplied

28. Demand The AMOUNT of a product that consumers want to BUY
Consumers must be willing and able to make the purchase in order for there to be a demand

29. Law of Demand = If the cost is down, people will buy more.
Price Demand =
If the cost is down, people will buy more.
If the cost is up, people will buy less

30. Human Behavior That Causes Demand
1) Substitution Effect :
As the price of a good goes up it becomes more expensive than other goods, causing people to choose the less expensive product
2) The Income Effect:
When the price of goods/services goes UP we feel POORER
When the price of goods/services goes DOWN we feel RICHER
Even though you FEEL richer/poorer you real income HAS NOT changed!

31. The menu for school lunch reads:
Cheeseburger = $ Slice of Pizza = $1.50
(Students usually buy about 500 cheeseburgers and 500 pizzas a day)
If the price of beef goes up then the price of Cheeseburgers will go up too.
Then the menu will change to:
Cheeseburger = $ Slice of Pizza = $1.50
(Students will then buy about 100 cheeseburgers and 900
pizzas a day.)
This change in spending = the Substitution Effect

32. As the price of gas goes up it becomes more expensive to fill our cars.
When gas was $1.00 a gallon, it cost $15 to fill my tank.
If gas goes to $4.00 a gallon, it will cost $60 to fill my tank.
That means I will drive fewer places in order to save my income.

34. Supply
The amount of goods/services that a producer makes available to sell

35. Law of Supply = If the cost is up, companies will make more
Price Supply =
If the cost is up, companies will make more
(because there is more money to be made)
Price Supply
If the cost is down, companies will make less

38. So… *When something is not scarce, there is not a high demand for it
Supply Demand =
*When something is not scarce, there is not a high demand for it
The opposite is also true
(Low supply = HIGH demand)

39. Surplus - When you have more supply than demand Shortage – When you have less supply than demand Equilibrium – When the supply and the demand are the same (equal)