Introduction to Economics: An Economic Way of Thinking. Mr. Mattingly Economics

Transcription

1 Introduction to Economics: An Economic Way of Thinking Mr. Mattingly Economics

2 What is economics? Economics = study of choices people make to satisfy needs & wants Economist = person who studies economic choices Two Economic Categories: Microeconomics = study of choices made by economic actors (small / single) EX: household, company, individual markets Macroeconomics = study of an entire economy or one its principal sectors EX: U.S. Unemployment

3 U.S. Unemployment: April 2010

4 Who makes decisions? Economic Decision Makers: Consumers = people who buy things Producers = people who make things Where do consumers and producers meet? Market = exchange place How has this changed? 100 years ago: Sears Catalog Today: TV and Internet

5 Vacation Trip: Cancun

6 Journey Challenge: Antarctica

7 How do we make decisions? Decision Making Factors: Needs = necessary for survival Ex: Water and Food Wants = beyond what is necessary for survival Ex: Television and ipod Types of Products: Goods = physical objects that can be purchased Services = actions that are performed for a fee

8 The Influence of the Environment: Resource = anything used to make or obtain what you need or want Four Factors of Production: Entrepreneurship Entrepreneur = person who attempts to start a new business Always involves risk taking Natural Resources Must be scarce and require payment Is Air? Human Resources Physical or Intellectual Human Effort Capital Resources (manufactured) Ex: buildings, machinery, or money Capital Good vs. Consumer Good

9 Activity: Starting a Business Write 8 things you would need for your business. Label each thing on your list with its factors of production category. Hint: #1 should be your idea for your business. Mr. Mattingly s List: 1. Sell Ugly Sweaters (Entrepreneurship)

10 The Basic Economic Problem: Scarcity Scarcity = result of unlimited needs and wants and limited resources Everyone faces scarcity. Common Limitations: Money or Time Scarcity leads to choice and decision-making. WWII Example: Pantyhose or Parachutes? How could you spend $100? Pondering Moment: U.S. Government Debt Household Budget Choices

11 Quiz Time: Introduction Quiz #1

12 PBS Frontline: Credit Cards

13 Dealing with Scarcity: Decisions Scarcity Problems: Money and Time Opportunity Cost = the value of the next best alternative given up Examples? EX: Buy a video game for $50 and don t have money to buy gas. Trade-off = sacrifice of one thing to have more of another Examples? EX: 2 Hours of Free Time - One Hour w/ friends and One Hour w/ grandma

14 Simulation: Planning the Prom

15 Producers Dealing with Scarcity: Allocate = distribute resources Goal: Satisfy the greatest number of needs and wants Three Questions Asked by Producers: What to produce? How to produce? For whom to produce?

16 Producers and Productivity: Productivity = level of output that results from a given level of input Efficiency = the smallest amount of resources to produce the greatest output Alarm Clock Factory Currently: 16 in 20 minutes Goal: 16 in 10 minutes Efficient Working Environment: Division of Labor = assigning a small number of tasks to each worker EX: Henry Ford s Assembly Line Specialization = focus on one activity Practice makes perfect.

17 Production Possibilities Curve: PPC = shows the production combinations of two products at the same time See handout.

18 Consumers and Producers: Exchange = agreement to provide one type of item for another Three Forms of Exchange: Barter = exchange one set of goods for another EX: School Lunch Trades Money = typically currency, standardized means of exchange EX: U.S Dollar Credit = promise payment of a specific time period EX: House Mortgage

19 Determining Value: Value = amount of money or price paid Dollar Amount ($) Value Factors: Baseball Cards Willingness to Pay Scarcity (Abundance?) Utility (Usefulness) What has more value, needs or wants?

20 Greater Value: Water or Diamonds?

21 Keynote Design: Determining Value Objective: Create a keynote on value of products. Keynote Guidelines: 1 Title Slide + Three Products Slides Products Slides: Description of the Product / Price Three Factors of Values Image of the Slide Must have transitions Due Friday: 15 Points

22 Product #1: Rolex Watch Description: leading luxury watch made by the swiss Price: $8,000 Factors of Value: Willingness to Pay: Very Few People EX: NFL Football Players Scarcity: Very Few Stores EX: Not sold at Wal-Mart Utility: Displays Time and Personal Image EX: Symbol of Wealth and Power Most Important Factor: Scarcity and Utility