1. Productivity

2. Need vs. Want
DISCUSS: What is the difference between a need and a want?
Need: something essential for survival
Ex: air, shelter, food, clothes
Want: something a person desires to have
Ex: Cadillac, Playstation3, New Bedroom set

3. The essential economic problem:
SCARCITY: Having UNLIMITED wants & needs but LIMITED resources

4. DISCUSS: CHOICES When you hear “ECONOMICS,” what comes to mind?
What we want to come to your mind…
CHOICES

5. Every CHOICE you make has…
Trade-offs: all of the choices when considering a decision
Opportunity cost: the opportunity you give up when making a decision.
Monetary cost: price you paid for a decision

6. (Write this to the side)
Marginal Costs
The extra or additional cost of producing one additional unit of an output
Ex: 30 bike helmets= $1500, 31 bike helmets= $1550  marginal cost= $50

7. (Side) Marginal Revenue
the extra revenue that results from selling one more unit of an output

8. Cost-Benefit Analysis
(Side)
Cost-Benefit Analysis
- an economic decision making technique that tells us to choose an action or make a decision when the benefits are greater than the costs

9. Impact of Scarcity (p.2 # 4)
DISCUSS: Why are diamonds so expensive compared to water?
Scarce resources=high price
Abundant (not scarce) resources=low price

10. Productivity

11. Productivity – What is it?
The measure of the efficient use of an economy’s resources.
Making the MOST of the resources you have.
Utilizing resources to 100% of their capacity.
UNDERUTILIZATION: not using resources efficiently
Production Possibilities Curve: graphic representation of an economies productivity potential

12. A Production Possibilities Curve
Units of food Units of clothing
(millions) (millions) 8m
7m m
6m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

13. The 3 Basic Economic Questions (p.3 # 6)
What to produce?
How to produce?
For whom to produce?

14. 3 Types of Economic Systems
Traditional
Command
Market

15. Traditional Economy What did you Produce?
Determined by your tradition and ancestors

16. Traditional Economy How did you Produce it? For Whom did you Produce?
The same way its always been done; NO SPECIALIZATION
For Whom did you Produce?
Produce for tribe or local community

17. Command Economy What did you Produce?
Determined by the government or central planner

18. Command Economy How did you Produce it? For Whom did you Produce?
Told how to by central planner; SPECIALIZATION
For Whom did you Produce?
The gov’t or central planner

19. Market Economy What did you Produce?
Determined by whatever would make the most profit

20. Market Economy How did you Produce it? For Whom did you Produce?
The way that made the most profit; SPECIALIZATION
For Whom did you Produce?
Consumers, people interested in product

21. Mixed Economy Most countries (including the US) are mixed economies.
This means they have some aspects of the 3 types of economies
The US is a mixed economy, but is mostly made up of a market economy.

23. Productivity (p.1)
Vocabulary

24. Productivity – What is it? (?’s box)
The measure of the efficient use of an economy’s resources.
Making the MOST of the resources you have.
Utilizing resources to 100% of their capacity.
UNDERUTILIZATION: not using resources efficiently
Production Possibilities Curve: graphic representation of an economies productivity potential

25. A Production Possibilities Curve
Units of food Units of clothing
(millions) (millions) 8m
7m m
6m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

26. Remember……
Scarcity forces people to make decisions about how they will use their resources!!!
**Economic decision making requires people to consider all the costs and benefits of a decision
What are trade-offs??? What is an opportunity cost???

27. Other Costs Fixed Costs Variable Costs Total Costs
Costs or expenses that are the same no matter how many units of are good are produced Ex: mortgage payments, rent
Variable Costs
Costs or expenses that change with the number of products produced
Ex: wages, raw materials, electricity bills, water bills
These costs increase when production increases and decrease when production decreases
Total Costs
- Fixed Costs + Variable Costs= Total Costs

28. Thinking at the Margin Marginal Costs
- The extra or additional cost of producing one additional unit of an output
Ex: 30 bike helmets= $1500, 31 bike helmets= $1550  marginal cost= $50
Marginal Revenue
the extra revenue that results from selling one more unit of an output

29. Cost-Benefit Analysis
- an economic decision making technique that tells us to choose an action or make a decision when the benefits are greater than the costs

30. Productivity - Vocabulary
How well resources are being used to produce a good or service.

31. Outputs vs. Inputs Output: something made/produced
Input: something that is used to make/produce an output

32. Input/Output Practice?
production
Output
Jeans
Input
Wood, nails, windows, construction worker
production
Output ?
Input
Wood, graphite, rubber
production
Output ?
Input ?
production
Output
Car

33. Division of Labor
Breaking up the steps of production among many workers

34. Specialization
Workers are experts at only one task and do that task efficiently

35. Ways to increase productivity
1790
Total population = 4 million
Farmer population = 3.6 million (90%)
1840
Total population = 17 million
Farmer population = 9 million (53%)
1940
Total population = 132 million
Farmer population = 30 million (23%)
1990
Total population = 246 million
Farmer population = 4 million (1%)
SO…why haven’t we all died of starvation if there are less farmers today than before?

36. An assembly line (p. 3 #8)
Increases productivity by having workers stand still and have output come to them to work on.

37. Technology
Increases productivity by improving the tools used to produce goods (robots, computers)

38. Human Capital
Increases productivity by making the worker smarter.

39. Automation
Increases productivity by using machines instead of humans (machines don’t get tired or take breaks)

40. Automation

41. Mixed Economy Most countries (including the US) are mixed economies.
This means they have some aspects of the 3 types of economies
The US is a mixed economy, but is mostly made up of a market economy.

42. Comparative Advantage (p.4)
When a country produces a good that is easy to make instead of a good that is hard to make.
Ex:
Saudi Arabia produces Oil
U.S. produces Wheat

43. How does it affect global markets?
Comparative advantage leads to interdependence between countries.
Ex: U.S. sends extra wheat to Saudi Arabia for oil.

44. DISCUSS:
When you go into Subway, is it faster if there is 1 worker behind the counter or 2?
What do the 2 workers do that makes it faster?

45. Law of Diminishing Returns (p. 4 #10)
Productivity will increase to a point, then begin to decrease as you add one factor of production.
Most productive at this point

46. Law of Diminishing Returns
By adding more factors of production (i.e. technology, better trained workers, better entrepreneurship) it leads to greater efficiency.
But ONLY to a certain
point and then you begin
to lose efficiency.

47. White collar vs. Blue collar workers
White collar workers
Professional or clerical job (desk job)
Usually paid by salary
Ex: Manager, secretary, engineer, doctor
Blue collar workers
Work in manufacturing jobs
Usually paid hourly
Ex: Factory worker, farmer, miner, plumber

48. Skilled vs. Unskilled
Skilled laborer (worker): A person who has special training/education to do their job.
Unskilled laborer (worker): A person who has no, or little training/education to do their job.

49. Skilled vs. Unskilled

50. Which is more productive
Skilled laborers are typically more productive since they have received more training and can do something others can not.