D AY 2 W E D N E S D AY, J A N U A RY 6 TH

Transcription

1 ECONOMICS D AY 2 W E D N E S D AY, J A N U A RY 6 TH

2 OPENER: DAY 2, JANUARY 6 TH On a clean sheet of paper, write the following heading: Your name Today s Date Block # Assignment # Assignment Title: Opener - Economics A First Impression Then, answer the following writing prompt: When you hear the word economics, what are the first ten words that you think of? Write them down and wait for further instructions. When I say Go, compare your list with those of your classmates. Do the words on your lists fall into any obvious categories?

3 CONNECTING THEMES IN ECONOMICS Each of the six content units in this course will connect to four main themes. 1. Scarcity The effect of limited resources on making charges. 2. Voluntary Exchange - The ways in which people gain from trade 3. Incentives - The role of incentives in making choices (Ex. Profit Motive) 4. Economic Interdependence - The costs and benefits of interdependency between two or more individuals, businesses, and/or nations

4 WHAT IS ECONOMICS? The study of Money? The study of the economy? The study of choices? Economics is the study of how individuals and nations make choices about how to use their scarce/limited resources to fill their unlimited needs and wants. Microeconomics- Deals with individual units of the economy. Individual Units can mean a person, a family or a community Macroeconomics- Deals with the economy on a national or global level

5 SCARCITY: BASIC ECONOMIC PROBLEM When our wants and needs exceed our resources we have the basic economic problem of Scarcity

6 SCARCITY LIKE DEATH & TAXES INESCAPABLE! No matter how much money we have, we always want more. Yes, we always want more. E. Napp

7 SCARCITY: THE BASIC ECONOMIC PROBLEM Unlimited needs and wants with limited resources. Primary needs include air, water, food, shelter, clothing, sleep. Secondary needs are called wants which include cars, Abercrombie, jewelry. Intangible needs include love, peace, happiness, pain.

8 WHO MAKES THE DECISIONS? Consumers- make decisions on what to buy Producers- make decisions on what to produce Possible products fall into two categories: Goods- physical objects to purchase Services- actions/activities performed for a fee

9 RESOURCES Anything that people use to make or obtain what they need or want is called a resource. In economics, resources are sometimes called inputs. Resources that can be used to produce goods and services are called FACTORS OF PRODUCTION.

10 4 FACTORS OF PRODUCTION 1. Natural Resources anything provided by Mother Nature 2. Human Resources - people s physical and intellectual value 3. Capital resources - are goods produced and used to make other goods and services. Basic categories of capital resources include tools, equipment, buildings, and machinery. 4. Entrepreneurship people putting resources together to create and innovate! Again, What is the basic economic problem? Scarcity

11 SCARCITY CAUSES CHOICES Because of Scarcity, people must make choices about how to allocate (or distribute) resources so that the greatest number of needs and wants will be satisfied. There are 3 basic question every society must ask. 1. What to produce? 2. How to produce? 3. For whom to produce?

12 HOW DO YOU KNOW IF YOU ARE WISELY USING RESOURCES? By studying productivity Productivity is the level of output that results from a given level of input (aka resources). Economic Goal >>> Use resources/inputs as efficiently as possible to create the largest amount of output or productivity.

13 EFFICIENCY A company that is not wisely using its resources should improve efficiency. Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. 'Economic Efficiency' is a broad term that implies an economic state in which every resource is optimally allocated to serve each person in the best way while minimizing waste and inefficiency. When an economy is economically efficient, any changes made to assist one person would harm another.

14 EFFICIENCY WHEN THERE S ROOM FOR IMPROVEMENT When companies strive to improve efficiencies they might introduce division of labor Division of Labor involves assigning one or more task/s to each individual worker. Each worker specializes in that particular task/s and becomes proficient (or very efficient) at that task. The production of most goods can be broken down into a number of specific tasks (division of labor), with each of these tasks assigned to specific workers (specialization)

15 THREE TYPES OF EXCHANGE 1. Barter- A direct trade of goods and services without money. 2. Money- Any item commonly accepted in exchange of goods, services, or the payment of debts. 3. Credit- A form of exchange with a promise to repay over a specified time.

16 BETTER THAN BARTER In order to avoid the problems of barter, goods and services are assigned a value that can be expressed as an amount of money (price). Value is determined by the price someone is willing to pay for the item. Why does water, a need, cost so little compared to diamonds, an item that is not necessary?

17 REMEMBER THE BASIC ECONOMIC PROBLEM? 1. Scarcity 2. Utility- the usefulness of an item to a person Utility can vary from person to person. Now we see that a diamond is both scarce and it also has utility. Water has utility, but it is not scarce enough to give it a high value.

18 SELF-SUFFICIENCY VS. INTERDEPENDENCE Self-sufficiency occurs when a country can fulfill all of their needs and wants without outside assistance. This is rare. That s why most countries are interdependent, meaning they rely on each other. Interdependence means that events or developments in one region of the world (or sector of the world economy) influence events or developments in other regions or sectors. Each economy produces products or services given their resources. Then they trade with other economies for goods and services they need, but haven t produced themselves

19 SCARCITY > CHOICES >TRADE OFFS Because choices must be made to efficiently use your resources, sometimes you will have to make a trade off T.O. = Trade Off- the sacrifice of one good in order to purchase or produce another. The cost of the T.O. is called a O.C. Opportunity Cost- the value of the next best alternative in terms of money, time, value and utility. Church, Movies, football games, homework, TV? You can t do everything so you have to make a choice.

20 EVERY CHOICE HAS ITS COST Economists also teach us that every choice we make has its cost. In other words, every time we get something, we give something else up. There is no such thing as a free lunch! E. Napp

21 If we choose to live near the ocean, we are more likely to experience flooding.

22 It s all about making choices and knowing the costs of those choices.

23 WHAT IS ECONOMICS? EXPLAINED ANOTHER WAY What is Economics?

24 QUESTIONS FOR REFLECTION Define Economics. Why must people make choices? Define scarcity. Why do our choices cost us? Define cost. Why is Economics a required course for graduation? E. Napp

25 HOMEWORK DAY 2, JANUARY 6 TH Read over your Guided Notes from today. Write any questions down in the margin to ask me tomorrow. Before you leave class today, make sure to get your Guided Reading for tonight! Using your Economics textbook or online textbook, read the rest of Chapter One Sections 2 and 3. As you read, write in all missing words and phrases. Remember to answer the questions at the end with complete thoughts and sentences.