ECONOMICS

Chapter 1 What is Economics?

Brain Storm Brain Storm At the top of your paper write down At the top of your paper write down everything that you would like to do todayeverything that you would like to do today

Next approximate time this will take Next approximate time this will take

You are in school for 8 hours, have 2 hours of You are in school for 8 hours, have 2 hours of homework, must eat dinner with your family homework, must eat dinner with your family for an hour and must sleep for 8 hours.for an hour and must sleep for 8 hours.

This leaves you 5 hours to complete This leaves you 5 hours to complete everything you want. everything you want.

Do you have enough time?Do you have enough time?

What would you choose. What would you choose.

Cave-onomicsCave-onomics

1.1. Why did Glug and Ug trade at the Why did Glug and Ug trade at the beginning of the video?beginning of the video?

2.2. What is the continued exchange of What is the continued exchange of money, goods, and services called?money, goods, and services called?

3.3. What is innovation? What drives it?What is innovation? What drives it?

4.4. What is the purpose of government What is the purpose of government in economics? in economics?

A) What is EconomicsA) What is Economics

1.1. The study of the The study of the choiceschoices that that people make to satisfy their needs people make to satisfy their needs and wants is and wants is economics.economics.

1.1. People must make choices because of People must make choices because of their unlimited wants and needs and their unlimited wants and needs and limited resourceslimited resources

2.2. The person who studies economic The person who studies economic __systemssystems is an is an _economist._economist.

Exit Ticket-This will be graded you are Exit Ticket-This will be graded you are able to use notes try not to thoughable to use notes try not to though

True/FalseTrue/False

1.1.Competition drives innovation. Competition drives innovation.

2.2.Economics is the study of choicesEconomics is the study of choices

3.3.People make choices because they People make choices because they have unlimited resourceshave unlimited resources

End Day 1End Day 1

B) Economic Actions – Two B) Economic Actions – Two ClassificationsClassifications

1.1. MicroeconomicsMicroeconomics – choices made by: – choices made by:

a)a) HouseholdsHouseholds

b)b) CompaniesCompanies

c)c) Individual markets_Individual markets_

2. 2. __Macroeconomics___Macroeconomics_ – the behaviors of – the behaviors of entire economies:entire economies:

a)a) Unemployment in the U.S.Unemployment in the U.S.

C) Economic Decisions C) Economic Decisions

1.1. To think economics, pay attention to To think economics, pay attention to the _the _moneymoney_ decisions you make._ decisions you make.

2.2. Everyone makes economic decisions. Everyone makes economic decisions. Ex. Kids to govts. –Two large groups Ex. Kids to govts. –Two large groups of decision makers:of decision makers:

a)a) ____consumersconsumers_– the people who _– the people who decide to buy thingsdecide to buy things

b)b) ____producers_producers_ – the people who make – the people who make things to satisfy needs and wantsthings to satisfy needs and wants

Wants vs. Needs Wants vs. Needs 1. People make their Economic decisions based on 1. People make their Economic decisions based on

____needsneeds___ and ____ and _wantswants___ to satisfy desires for ___ to satisfy desires for goods and services.goods and services.

2. _2. _NeedsNeeds_ are those goods and services necessary _ are those goods and services necessary for survival. Ex. Food, shelter, etc…for survival. Ex. Food, shelter, etc…

3. _3. _WantsWants__ are goods and services beyond what is __ are goods and services beyond what is necessary for survival. Ex. Magazines, TV's, cell necessary for survival. Ex. Magazines, TV's, cell phones, etc…phones, etc…

4. __4. __GoodsGoods___ are objects that can be purchased. ___ are objects that can be purchased. Ex. stuff…Ex. stuff…

5. _5. _ServicesServices__ are actions or services that are __ are actions or services that are performed for a fee. Ex. movies, Tiger tickets, the performed for a fee. Ex. movies, Tiger tickets, the plumberplumber

D) Economic D) Economic ResourcesResources____________

1.1. Human resources___Human resources___ are any human effort are any human effort exerted during production. Ex. migrant workersexerted during production. Ex. migrant workers

2.2. _Capital__resources_Capital__resources are the _ are the _manufactured manufactured materialsmaterials_ used to create products. Ex. steel, _ used to create products. Ex. steel, aluminum, lumber, etc…aluminum, lumber, etc…

3.3. Capital _goods_____Capital _goods_____ are the machinery, are the machinery, buildings, tools used in producing products. buildings, tools used in producing products. Ex. robotic welders.Ex. robotic welders.

4.4. Natural__resourcesNatural__resources – produced by – produced by __naturenature_and used to produce goods and _and used to produce goods and provide services. Ex. salt, ores, timber, etc…provide services. Ex. salt, ores, timber, etc…

5. 5. ConsumerConsumer__goodsgoods are the goods and are the goods and services that people services that people buybuy. Ex. Cars, food, . Ex. Cars, food, skis and snowboards, etc…skis and snowboards, etc…

6. Some products can be __6. Some products can be __eithereither_ consumer _ consumer or capital goods. Ex. The truck used as a or capital goods. Ex. The truck used as a family car or to pull the landscaping trailer.family car or to pull the landscaping trailer.

7. 7. TechnologyTechnology_ is used to improve new or _ is used to improve new or existing products. existing products.

8. 8. EntrepreneurEntrepreneur_ is a person who attempts _ is a person who attempts to start a new _to start a new _businessbusiness_ or introduce a _ or introduce a new _new _product__product__ – risking economic failure. – risking economic failure. Ex. Croc whole fillersEx. Croc whole fillers

E) Economic Questions E) Economic Questions

1.1. People decide how to People decide how to _allocate_allocate__ resources to __ resources to satisfy the greatest number of needs and wants.satisfy the greatest number of needs and wants.

2.2. To allocate resources effectively, economic To allocate resources effectively, economic systems or societies must address three basic systems or societies must address three basic economic questions.economic questions.

a)a) What_ to produceWhat_ to produce– What are the needs and – What are the needs and wants of society? Ex. guns vs. butterwants of society? Ex. guns vs. butter

b)b) How_to produceHow_to produce – What resources to use, – What resources to use, methods of production? Ex. labor intensive vs. methods of production? Ex. labor intensive vs. technologytechnology

c)c) For whom_to produceFor whom_to produce – Who gets the product or – Who gets the product or service and how will they get it? Ex. cell service and how will they get it? Ex. cell networks in rural areasnetworks in rural areas

F) ProductivityF) Productivity

1.1. A society must determine how to use its A society must determine how to use its __resources___resources___ effectively. effectively.

2.2. ProductivityProductivity__ is a level of output that __ is a level of output that results from a given level of input. Ex. results from a given level of input. Ex. Hershey’s – m & m’s or candy bars Hershey’s – m & m’s or candy bars today?today?

3.3. EfficiencyEfficiency is the use of the smallest is the use of the smallest amount of resources to produce the amount of resources to produce the greatest amount of output. greatest amount of output.

G) Trade Offs and G) Trade Offs and Opportunity Costs Opportunity Costs

1.1. Trade-offsTrade-offs occur because of _ occur because of _limitedlimited__ __ resources, one good is sacrificed for resources, one good is sacrificed for another. Ex. corn for food or fuel???another. Ex. corn for food or fuel???

2. 2. Opportunity costOpportunity cost is the value of the next is the value of the next best alternative given up to obtain that best alternative given up to obtain that item. Ex. buy the mini-van vs. the item. Ex. buy the mini-van vs. the convertibleconvertible

H) Exchange H) Exchange

1.1. ExchangeExchange_ is when producers and _ is when producers and consumers decide to provide one type of consumers decide to provide one type of item in return for another.item in return for another.

2.2. Forms of exchange:Forms of exchange:a)a) BarterBarter_ – exchanging one set of goods _ – exchanging one set of goods

for anotherfor anotherBarter relies on bargainingBarter relies on bargaining

b) _b) _MoneyMoney_ – a standardized means of _ – a standardized means of exchangeexchange

(Money continued…)(Money continued…)

1. __1. __MoneyMoney_ has three functions:_ has three functions: Standardized item easily traded for _Standardized item easily traded for _goodsgoods_ and _ and

____servicesservices____ Measure of value that has a common worthMeasure of value that has a common worth A store of A store of __value__value_ that can be used at a later _ that can be used at a later

datedate

c) c) CreditCredit allows consumers to pay allows consumers to pay for an item over a specified for an item over a specified period of time.period of time.

1. Credit allows _1. Credit allows _consumersconsumers_ to _ to use an item before completing use an item before completing payment.payment.

2. Consumers who fail to pay may 2. Consumers who fail to pay may lose the _lose the _merchandisemerchandise__(stuff) __(stuff) and/or lose future credit.and/or lose future credit.

Opportunity Cost Opportunity Cost Activity p. 28Activity p. 28

Create a list of all trade offs for Create a list of all trade offs for you being in school (must have at you being in school (must have at least 10)least 10)

Circle the opportunity cost.Circle the opportunity cost. Write 2 sentences on why this is Write 2 sentences on why this is

your opportunity cost. your opportunity cost.