ECONOMICS
D AY 1 – M O N D AY, J A N U A RY 8 T H
MONDAY, JANUARY 8TH
• Good morning/afternoon!
• As you enter, please:
– Sit in your Synergy number seat
– Front table – pick up your Econ Preview Word Search and
complete it.
• We’ll take attendance and get started with our Econ Pretest in
just a moment!
CLASS UPDATES
• Regular bell schedule today
• Reminders:
– Next Tuesday the following items are due:
• Completed and signed Syllabus
• Class Materials
SHIFTING INTO ‘TEST MODE’
• Please:
– Clear off your desk
– Log on to your laptop and wait for further instructions.
Laptops
Log-on
Click on iRespond Web App
If you don’t have it, go to web
browser > iRespond.cobbk12.org
Go to:
Georgia.Powell
Password: Your Lunch #
PCs
Log-on
Click on iRespond Web App
Go to:
Georgia.Powell
go to Econ Pretest
ECONOMICS PRETEST
• During any assessment (even a pretest) please remember:
– No talking
– No squawking (no disruptions)
– No gawking (eyes on your own paper)
– No walking (raise your hand & I’ll come to you)
– No electronics – until all tests are turned in.
– When you’re done with your Pre-test raise your hand and I’ll bring you
your Techie Scavenger Hunt so you can get started!
TECHIE SCAVENGER HUNT!Goal
To have fun
while you
get on-board
with all our
class
technological
tools!
TECHIE SCAVENGER HUNT!
Step #1 – CCSD WIFI
(don’t use up your data!)
Instructions are available for:
• Apple iOS phones
• Android phones
• cobbwireless
If additional help is needed, Mr. Hoeh
from Cobb County Instructional
Technology will be here tomorrow to
help you.
TECHIE SCAVENGER HUNT!
Step #2 – QR Code Reader
Go to your phone’s App Store and
download a free QR Code Reader.
There are lots of free options. Check the
consumer ratings to decide which is your
best bet!
TECHIE SCAVENGER HUNT!
Step #3 – Office 365
If you already have your Office 365 logon, then
just login and scan the QR code to complete
your survey.
If you don’t already have Office 365, follow the
instructions for your phone to set it up. Then
you can scan the QR code to complete your
survey.
TECHIE SCAVENGER HUNT!
Step #4 – GCEE Phone App
Once again, go to your phone’s App Store to
find the GCEE Phone App with lots of great
practice questions to help you prep and ace
your economics tests!
TECHIE SCAVENGER HUNT!
Step #5 – Class Website
1. Using your favorite web browser, go to our
class website gpowell6.weebly.com
2. Scan the QR code to access the survey
3. Then tour our website to answer all the
questions
• Hint: some tabs are located to the far right,
so you have to scroll over to find them…
TECHIE SCAVENGER HUNT!
Step #6 – Google Classroom
1. You need a Google email account (gmail), so
if you don’t have one you’ll need to create
one.
2. Then go to Google Classroom and you
should be able to see our class and join our
class!
3. If needed, our Class Syllabus and website
also has the class codes for your Google
Classroom.
TECHIE SCAVENGER HUNT!
Step #7 – EverFi.com
1. Go to EverFi.com, create an account and
join our class
2. If needed, our Class Syllabus and website
also has the class codes for your Google
Classroom.
TECHIE SCAVENGER HUNT!
Step #8 – Remind Phone App
1. If you already have the Remind
phone app, then just join our class
2. If not, then go to your phone’s App
Store to download it (it’s free),
create an account & join our class!
TECHIE SCAVENGER HUNT!
Step #9 - Quizlet
1. If you already have the Quizlet phone app, then just join our class
2. If not, then go to your phone’s App Store to download it (it’s free), create
an account & join our class!
TECHIE SCAVENGER HUNT!
GENTLE REMINDERS!
• Due Tuesday, January 16th:
– Signed Class Syllabus
– Class Materials Check
SIGNED CLASS SYLLABUS
Need your
checked & signed
Syllabus back by
no later than
Tuesday, January
16th!!
CLASS MATERIALS
UNIT ONEFUNDAMENTALS OF ECONOMICS• Economics Unit One Summary – Let’s take a tour!
TWO WAYS TO DO YOUR VOCABHand-Written (no typed!)
• Write out your definitions
(neatly and completely) on your
own lined paper.
• Label each of your papers as
instructed.
Quizlet
1. Practice with electronic flash
cards and memory games
2. Then make at least an 80 on
the electronic test.
Do Both for
Bonus Points!!OR
UNIT ONEFUNDAMENTALS OF ECONOMICS
You can complete your
Study Guide as we progress
through the unit!
1. Use the same heading on your
Study Guide pages
2. Write down the question and
underline it
3. Answer the question
4. Leave a blank line between questions
to make it easier to read
ECONOMICS UNIT SUMMARY
• This is a fantastic, easy to
understand summary of everything
you need to know for each unit
sorted by each learning standard.
• We’ll be using each day with our
‘Expedition Econ’ openers.
• To receive maximum points you’ll
need to read your Unit Summary by
‘Power Reading’
• So keep this in the front of your
Unit Papers in your notebook so
that’s easy to find and review.
Get the most out of your reading by doing…
Power Reading!1. This assignment is meant to be read one
Learning Standard at a time.
2. Read the Learning Standard explanation
highlight the important information
circle words/phrases you don’t know or
understand
underline the most important concepts
really think about what you’ve read!
1. Then, read the questions for that Learning
Standard and see if your highlighted info
answers the question/s – if so, you have what
you need to answer the question!
2. If not, reread the passage looking for the
necessary info or needed clarifications.
ECONOMICS
D AY 2 – T U E S D AY, J A N U A RY 9 T H
WEDNESDAY, JANUARY 10TH
• Good morning/afternoon!
• As you come in, please:
– Sit in your Synergy number seat
– Turn in your
• Techie Scavenger Hunt sheet with your name on it
• Signed Syllabus
– Front Table – pick up:
• Unit One Objectives
• Expedition Econ – Day 1
CLASS UPDATES
• Transcript checks
• Reminders:
– Friday – Unit One Formative
• Study with:
– Quizlet vocab,
– class notes,
– Learning Standards through Thursday
– Tuesday:
• Completed and signed Syllabus due
• Class Materials Check
SIGNED CLASS SYLLABUS
Need your
checked & signed
Syllabus back by
no later than
Tuesday, January
16th!!
CLASS MATERIALS
UNIT OBJECTIVES/SUMMARY
• New series of openers utilizing our Unit Objectives/Vocabulary/Learning
Standard Summaries
– At the beginning of each unit you’ll receive a Unit Summary which includes:
• Unit Learning Standards
• Unit vocabulary
• Unit Study Guide
• Unit core content sorted by learning standard!
UNIT ONEFUNDAMENTALS OF ECONOMICS• Economics Unit One Summary – Let’s take a tour!
TWO WAYS TO DO YOUR VOCABHand-Written (no typed!)
• Write out your definitions
(neatly and completely) on your
own lined paper.
• Label each of your papers as
instructed.
Quizlet
1. Practice with electronic flash
cards and memory games
2. Then make at least an 80 on
the electronic test.
Do Both for
Bonus Points!!OR
UNIT ONEFUNDAMENTALS OF ECONOMICS
You can complete your
Study Guide as we progress
through the unit!
1. Use the same heading on your
Study Guide pages
2. Write down the question and
underline it
3. Answer the question
4. Leave a blank line between questions
to make it easier to read
EXPEDITION ECON
• New series of openers which prompts you to
read your Unit Summary and gain initial
understandings of today’s learning standard
• Follow the headings to find the Learning Standard,
Power Read the passage on that Learning
Standard and answer the questions.
• Then move on to the next Learning Standard and
repeat!
Get the most out of your reading by doing…
Power Reading!1. This assignment is meant to be read
one Learning Stand at a time.
2. Read the Learning Standard
explanation
highlight the important information
circle words/phrases you don’t know
or understand
underline the most important
concepts
really think about what you’ve read!
1. Then, read the questions for that
Learning Standard and see if your
highlighted info answers the
question/s – if so, you have what you
need to answer the question!
2. If not, reread the passage looking for
the necessary info or needed
clarifications.
TODAY’S LEARNING STANDARD
• SSEF1 Explain why limited productive resources and unlimited wants result in
scarcity, opportunity costs, and tradeoffs for individuals, businesses, and
governments.
a. Define scarcity as a basic condition that exists when unlimited wants exceed limited
productive resources.
b. Define and give examples of productive resources (i.e. factors of production): natural
resources (i.e. land), human resources (i.e. labor and human capital), physical capital and
entrepreneurship.
c. Explain the motivations that influence entrepreneurs to take risks (e.g., profit, job
creation, innovation, and improving society).
d. Define opportunity cost as the next best alternative given up when individuals,
businesses, and governments confront scarcity by making choices.
LIVING ECON EVERY DAY!• Think back to when you were younger…
– When you were really young is there anything
you wished you had more of?
– How about middle school?
– How about yesterday?
– How about today?
• Why couldn’t you have all that you wanted? What was
the problem?
• How did you resolve the situation?
HOW MUCH WOULD YOU PAY?
BIG ECONOMIC IDEA – SCARCITY• Because we have unlimited wants and very limited resources we will
ALWAYS have scarcity.
• No matter how wealthy someone is – they always want more
• Scarcity is relative:
– what is precious/valuable (i.e. scarce) to you may
not mean anything to someone else
– Timing
– Needs
WANTS VS. NEEDS
To understand scarcity we need to remember the
difference between wants and needs:
Need
Things we need for survival – air, food, water, shelter, cloths
(not cell phones!)
Wants
Things we desire but are NOT essential for survival.
(yes – that’s a cell phone!)
SCARCITY AND CHOICE
• Because our limited resources won’t allow us to
have everything we want/need, we have to make
choices.
ECONOMICS
• Economics is the study of how we try to
satisfy our needs and wants by
making choices.
• Because people act:
– individually,
– in groups (such as businesses) and
– through governments
economists study each of these groups.
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 choices.
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
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
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
SCARCITY AND PRICES
• In market economies (like ours) scarcity determines availability and therefore
price.
ThinkWrite it down & think about it
on your own
Pair Discuss with your neighbor & write
down your thoughts on the topic. Be
prepared to share with the class.
ShareAfter sharing your ideas & listening
to others, write down your
conclusions below
What items are scarce &
expensive? Why?
What items aren’t scarce but are
still expensive? Why
Can you think of any items that
are scarce and NOT expensive?
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.
CHECKPOINT QUESTION #1
Opportunity cost is BEST described as the
A. most expensive resource used in production
B. sum of all production costs
C. value of the best alternative forgone (given up) when a choice is made
D. monetary value of all alternatives forgone (given up) when a choice is made
CHECKPOINT QUESTION #2
. The two types of products are…
A. human resources and capital resources
B. producers and consumers
C. goods and services
D. shelter and transportation
CHECKPOINT QUESTION #3
A person who makes goods or provides a service is acting as…
A. an economist
B. a consumer
C. a producer
D. none of the above
SCARCITY RESOURCE GAME
ECONOMICS
D AY 3 – W E D N E S D AY, J A N U A RY 1 0 T H
THURSDAY, JANUARY 11TH
• Good morning/afternoon!
• As you come in, please:
– Sit in your Synergy # seat
– Front table:
• Turn in your signed Syllabus (last day is Tuesday)
• pick up your Expedition Econ and complete it by reading your
Unit One Economic Summary!
– Front side – Learning Standards – SSEF1 c & d
– Back side – Learning Standard – SSEF2 a, b & c
CLASS UPDATES• Key Dates to Remember:
– Tomorrow – Unit One Formative
• covers Learning Standards SSEF1 &SSEF2, scarcity, factors of production,
opportunity cost
– Monday – MLK Holiday –Yay!
– Tuesday –
• Signed Syllabus due
• Class materials check
– Friday –
• Unit One Summative
• All Unit papers due!
CLASS UPDATES
• Reminders
– Keep completing your Unit Study Guide as we move through the unit – don’t wait until the night
before the test!
– Keep signing up for our class websites
QUIZLET• Congratulations to the following students who have joined our classes!
First BlockDalila
Jose
Davionne
Not sure who you are!
Jaasdm
Rivera_Estrada
Please go in and change
your sign-on name so I
know who you are!!
Second BlockAmy
Elila
Katie
Nik
Nyima
Chantz
Yasmid
Not sure who you are!
MajesticBells
Please go in and change
your sign-on name so I
know who you are!!
Fourth BlocDennis
McKenzie
QUIZLET
• If you haven’t already, please still join our class!
– Two ways –
• Phone App
• PC based
• Class Codes:
– First Block https://quizlet.com/join/xD2FmUppg
– Second Block https://quizlet.com/join/maCQZ7fFe
– Fourth Block https://quizlet.com/join/YzV75fWQv
CLASS UPDATES
• Remember to keep checking our class website!
gpowell6.weebly.com
Password: PHS Falcons
TODAY’S LEARNING STANDARD
• SSEF1 Explain why limited productive resources and unlimited wants result in
scarcity, opportunity costs, and tradeoffs for individuals, businesses, and
governments.
a. Define scarcity as a basic condition that exists when unlimited wants exceed limited
productive resources.
b. Define and give examples of productive resources (i.e. factors of production): natural
resources (i.e. land), human resources (i.e. labor and human capital), physical capital and
entrepreneurship.
c. Explain the motivations that influence entrepreneurs to take risks (e.g., profit, job
creation, innovation, and improving society).
d. Define opportunity cost as the next best alternative given up when individuals,
businesses, and governments confront scarcity by making choices.
ECONOMICS DEALS WITH THE STUFF WE NEED TO MAKE OTHER STUFF• Factors of production are the economic resources needed to
produce goods and services.
• There are four factors of production:
1. Land
2. Labor
3. Capital
4. Entrepreneurs tie land, labor &
capital together into a productive enterprise.
• Each is limited in supply (scarcity)
FOR ECONOMISTS, LAND IS MORE THAN DIRT
Land: all the natural resources found on or under the ground that are used
to produce goods and services.
Water Iron Plants
Forests Coal Animals
Fish Oil
• Land resources are the raw materials in the production process.
– These resources can be renewable, such as forests, or nonrenewable such as oil
or natural gas.
• The income that resource owners earn in return for land resources is called
rent.
THINK ABOUT IT!
ThinkWrite it down & think about it
on your own
Pair Discuss with your neighbor & write
down your thoughts on the topic. Be
prepared to share with the class.
ShareAfter sharing your ideas & listening
to others, write down your
conclusions below
Why wouldn’t a parking lot be
considered a land factor of
production?
FOR ECONOMISTS, LABOR IS MORE THAN ELBOW GREASE• Labor: all the human time, effort and talent used to produce goods & services
– Labor resources include the work done by the waiter who brings your food at a local
restaurant as well as the engineer who designed the bus that transports you to school.
– It includes an artist's creation of a painting as well as the work of the pilot flying the
airplane overhead.
• If you have ever been paid for a job, you have
contributed labor resources to the production of
goods or services.
• The income earned by labor resources is called wages
and is the largest source of income for most people.
THINK ABOUT IT!
ThinkWrite it down & think about it
on your own
Pair Discuss with your neighbor & write
down your thoughts on the topic. Be
prepared to share with the class.
ShareAfter sharing your ideas & listening
to others, write down your
conclusions below
Why would a heart surgeon and
a construction worker fall under
the labor factor of production
category?
FOR ECONOMISTS, CAPITAL IS MORE THAN MONEY
Capital: Resources made and used by people to
produce and distribute goods and services.
Tools Factories Computers
Machinery Offices Cell Phones
Roads Airports
• In addition to the physical capital examples above, there is also human
capital – what’s added (in terms training, education and increased
experience) to the labor force
• Man-made, transferable, depreciates
• The income earned by owners of capital resources is interest.
FOR ECONOMISTS, IT MATTERS WHO GETS THE BALL ROLLINGEntrepreneurship: the bringing together of all the factors using
ingenuity, skill, vision and a willingness to take risks necessary for starting
a new business enterprise.
– The most successful entrepreneurs are innovators who find new
ways produce goods and services or who develop NEW goods
and services to bring to market.
• Entrepreneurs thrive in economies where
they have the freedom to start businesses
and buy resources freely.
• The payment to entrepreneurship is profit.
THINK ABOUT IT!
ThinkWrite it down & think about it
on your own
Pair Discuss with your neighbor & write
down your thoughts on the topic. Be
prepared to share with the class.
ShareAfter sharing your ideas & listening
to others, write down your
conclusions below
Can someone start a new
business without taking a risk?
HOW THESE FACTORS ARE INTERCONNECTED IS CRITICAL
CHECKPOINT QUESTION
Which of the following is a capital resource?
A. iron ore
B. trained construction worker
C. industrial machinery
D. haircut
CHECKPOINT QUESTION
Steel, that will be used to produce washing machines, is purchased in a:
A. Factor (of production) market as capital
B. Product market as a consumer good
C. Factor (of production) market as a consumer good
D. Product market as a natural resource
FACTORS OF PRODUCTIONSTAND AND SORT
• Everyone should be getting a factor of production.
– Keep it face down until I tell you to turn it over
– When I tell you, turn it over
• Think about what type of factor of production it is and stand
under the sign for your Factor
– Talk with your Factor-mates & decide if you’re in the right spot!
• Be prepared to double-check and discuss
ECONOMICS
D AY 4 – T H U R S D AY, J A N U A RY 1 1 T H
FRIDAY, JANUARY 12TH
• Good morning/afternoon!
• As you come in, please:
– Sit in your Synergy # seat
– Turn in your signed Syllabus
• final due date – Tuesday!
SHARK TANK!
• Shark Tank, the critically acclaimed and multi-Emmy® Award-winning reality show has
reinvigorated entrepreneurship in America.
• The Sharks – tough, self-made, multi-millionaire and billionaire tycoons – continue their search
to invest in the best businesses and products that America has to offer. The Sharks will once
again give people from all walks of life the chance to chase the American dream and potentially
secure business deals that could make them millionaires.
• The Sharks are:
– billionaire Mark Cuban, owner and chairman of AXS TV and outspoken owner of the 2011 NBA
champion Dallas Mavericks;
– real estate mogul Barbara Corcoran;
– "Queen of QVC" Lori Greiner;
– technology innovator Robert Herjavec;
– fashion and branding expert Daymond John; and
– venture capitalist Kevin O'Leary.
TIME FOR OUR FIRST FORMATIVE!
• Please clear your desk and power-down all electronics.
• When you get your Zipgrade bubble-sheet, please double-
check you got the correct one.
TEST MODE
• Until the LAST papers are turned in (and I let you know we’re done)
– No electronics
– No talking
– No squawking
– No walking
– No gawking!
TODAY’S LEARNING STANDARDSSSEF1 Explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments.
a. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.
b. Define and give examples of productive resources (i.e. factors of production): natural resources (i.e. land), human resources (i.e. labor and human capital), physical capital and entrepreneurship.
c. Explain the motivations that influence entrepreneurs to take risks (e.g., profit, job creation, innovation, and improving society).
d. Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity by making choices.
SSEF2 Give examples of how rational decision making entails comparing the marginal benefits and the marginal costs of an action.
a. Define marginal cost and marginal benefit.
b. Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs.
c. Explain that people, businesses, and governments respond to positive and negative incentives in predictable ways
ENTREPRENEURS
• The ‘secret sauce’ of economic success!
• Shark Tank Top 10
ENTREPRENEURS – RISKS & RETURNS
• Entrepreneurs take major financial risks, work long
hours and practically torture themselves trying to stay afloat and
build a business from the ground up.
– Why would anybody want to go through with it?
• The obvious answer is profit (the money that is left after all
expenses have been paid)!
• The less obvious reasons include:
– Control over their destinies
– Flexibility
– The fulfillment of job creation, innovation and improving society
– Ultimately the hope of a lasting legacy – personally and
professionally!
EVEN ENTREPRENEURS EXPERIENCE SCARCITY
Every single person on Planet Earth
WANTS more than they can afford!
Even Jeff Bezos!
SHARK TANKBONUS POINTS OPPORTUNITY!
If you enjoy watching Shark Tank, do it for bonus points!
Each unit, you can
• watch up to two episodes of Shark Tank
• analyze each episode with the Entrepreneurship Breakdown sheet
(Episode #1 on one side and Episode #2 on the other side)
– Quality analysis needed, streaming the episode helps so you can stop it and write things
down as you watch
• Turn your completed Entrepreneurship Breakdown analyses sheet with your unit
papers before the Unit test to gain a bonus point assignment.
– Individual analysis, no copying each other’s papers!
OPPORTUNITY COST
• Opportunity cost is what you must give up to obtain
something else, the second-best alternative.
– Every time we make a choice we have an opportunity cost!
• Opportunity cost can be anything (time, sleep, pleasure, stress) as long as it’s our second best
choice.
THINK ABOUT IT!ThinkWrite it down &
think about it on
your own
Pair Discuss with your neighbor & write down your
thoughts on the topic. Be prepared to share with
the class.
ShareAfter sharing your ideas & listening to
others, write down your conclusions
below
Feel like pizza? Name all your options for pizza
Underline your #1 choice
What’s your #2 choice (i.e. Opportunity Cost)
___________________
Everything else is a _____________________
MARGINAL BENEFITS AND COSTS
• Economic decisions are always made on the basis of marginal
costs and marginal benefits.
– So what is marginal??
Always additional – specifically ONE more!
• Marginal cost of producing a good is the additional cost of
producing one more unit of the good.
• Marginal benefit of consuming a good is the additional value of
consuming one more unit of it.
RATIONAL DECISION-MAKING
Rational (logical) decisions are reached when:
• marginal benefit is equal to (or greater than) marginal cost.• https://www.youtube.com/watch?v=WQdbdPFEwSo
THINK ABOUT IT!ThinkWrite it down &
think about it on your
own
Pair Discuss with your neighbor & write down your
thoughts on the topic. Be prepared to share with
the class.
ShareAfter sharing your ideas & listening to
others, write down your conclusions
below
Brainstorm all the benefits of winning an Olympic
medal
Brainstorm all the costs involved in becoming an
Olympic champion
Are the marginal benefits equal (or greater than)
the marginal costs?
Incentives are anything that motivates action from people, businesses and even
governments
There are two kinds of incentives:
1. Positive Incentives Motivation to gain a perceived benefit
Examples: savings, sales, discounts, promotion
2. Negative Incentives Motivation to avoid a perceived punishment, cost
Examples: fines, prison, tax, penalties
INCENTIVES
THINK ABOUT IT!ThinkWrite it down & think
about it on your own
Pair Discuss with your neighbor & write down your
thoughts on the topic. Be prepared to share with the
class.
ShareAfter sharing your ideas & listening to
others, write down your conclusions
below
Sort the following by
whether they are positive
or negative incentives
50% off sale
Buy-one-get-one-free
Library fines
Income tax credit
Traffic ticket
Subsidy
Low interest loans
“Order in the next 2
minutes!”
Examples of positive incentives
Examples of negative incentives
EFFICIENCY• In economics, efficiency means:
– Getting the most outputs (goods or services) from your inputs (factors of
production)
– Not wasting any of your inputs (not a second or a drop!)
– People are always trying to be
more efficient…but how?
WAYS TO BECOME MORE EFFICIENT
• The division of labor refers to the practice that the tasks of
producing a good or service are divided up into separate tasks.
• When workers focus on performing separate tasks, specialization
occurs.
• Specialization is when workers gain
experience and training to become a
specialist/expert at what they do – so
they can perform their task as efficiently
as possible
DIVISION OF LABOR AND SPECIALIZATION
• Within the economy as a whole, the division of labor explains why even if you
bake your own bread, you typically don't grow your own wheat, grind it into
flour, build your own oven, make your own bread-pans and so on.
• Instead, people specialize in a few skills and then take the wages that they earn
from those skills to purchase the other goods and services that they desire
from other specialists.
• In this way, the division of labor and specialization is the basis for an economy
to exist.
ADAM SMITH THE WEALTH OF NATIONS
• Adam Smith started his classic book The Wealth of Nations with a discussion of
the division of labor as the basis for understanding how an economy works.
• He identified three reasons why the division of labor increases output:
1. workers who specialize on one job become much better at doing it;
2. with specialization, the time that it would take to switch between jobs is
eliminated;
3. workers who specialize on one job often invent more effective ways or new
machines for doing the job.
ADAM SMITH THE WEALTH OF NATIONS
• But as Adam Smith makes clear, specialization is possible only when people are
able to coordinate their production and consumption decisions with each other.
• The study of economics is largely concerned with explaining how this
coordination takes place.
VOLUNTARY EXCHANGE• People do not make everything that they and their family use: that is,
– They do not grow all their own food,
– Sew their own clothes,
– Build their own house and
– Provide themselves personally with health care and education.
• Instead, people focus on a particular job and
then use the wages that they earn from that job
to purchase the goods and services they desire.
• In this way, an economy forms an interlinked
network of trade, exchange and
interdependence.
VOLUNTARY EXCHANGE
• Specialization is the basis of trade and interdependence among individuals,
cities, regions and countries.
– Most countries do not produce all of what they consume.
– Instead, they focus more heavily on producing certain products and trading with
other countries.
• Thus, the global economy is a network of trade and interdependence.
• When trade is voluntary and non-fraudulent, both parties in the trade gain.
CHECKPOINT QUESTION #1
Opportunity cost is BEST described as the
A. most expensive resource used in production
B. sum of all production costs
C. value of the best alternative forgone (given up) when a choice is made
D. monetary value of all alternatives forgone (given up) when a choice is made
CHECKPOINT QUESTION #2
When the government lowers taxes this acts as a _________________ incentive to spend?
a. Positive
b. Negative
CHECKPOINT QUESTION #3
How does division of labor and specialization help people, companies
and governments become more efficient?
POWELL PAPER CHAIN FACTORY
• We need three volunteers please!
1. Factory Worker
2. Data Manager
3. Results Charting Manager
POWELL PAPER CHAIN FACTORY
• Today we’re going to see how to make paper chains as efficiently
and effectively as possible!
• While we watch our factory worker, data manager and results
charting manager do their thing, we’ll be capturing the same
information on our own Paper Chain Factory info sheets.
POWELL PAPER CHAIN FACTORY
• What the audience needs to do:
– Get out your colored pencils and color code your Data Key
– When each round is completed, fill in your data chart (just like the Data Manager on the whiteboard.
– At the end, the results graphing manager will do their thing on the whiteboard with your help and then you can copy it on your sheet of paper.
– Then we’ll discuss!
POWELL PAPER CHAIN FACTORY
• What are our Four Factors of Production?
• Last but not least – the Entrepreneur!
Factor What is it?
Land (from Mother Nature)
Labor (Muscles & Brains)
Capital (Tools, Machines…)
POWELL PAPER CHAIN FACTORY
Round # # of Workers
QL
Total Product
TP
Marginal Product
(=change in TP)
Average Product
(TP/QL)
1
2
3
4
5
6
POWELL PAPER CHAIN FACTORY
• Let’s graph
what
happened:O
utp
ut
(to
tal,
mar
gin
al &
ave
rage
)
Number of Workers (QL)
A COUPLE OF THOUGHTS BEFORE YOU HEAD OUT FOR A GLORIOUS WEEKEND!
• Great week!
• Hope you enjoy your weekend!
• Over the weekend – just a little to do
– Econ Everywhere – use your unit
summary to Power Read and find
the answers
– Vocab – practice, practice!
– Study Guide – lower the stress
level – complete 5-6 questions/
night!
ECONOMICS
D AY 5 – T U E S D AY, J A N U A RY 1 6 T H
TUESDAY, JANUARY 16TH
• Good morning/afternoon!
• As you come in, please:
– Sit in your NEW assigned seat (see diagram for more details) based on our Unit One
Formative results from Friday
– Front Table:
• Turn in your signed Syllabus (if you haven’t already)
• Pick up your Expedition Econ – Day #4 and complete it using your Unit One Summary pages
• Pull out your class materials for me to check (leave them on the edge of your desk to make
things easier)
– 3 ring notebook
– Divider pages
– Colored pencils/highlighter/regular pens & pencils
– Loose leaf lined paper
TODAY’S LEARNING STANDARD
SSEF4 Compare and contrast different economic systems and explain how they answer
the three basic economic questions of what to produce, how to produce, and for whom
to produce.
a. Compare traditional, command, market, and mixed economic systems with regard to private
ownership, profit motive, consumer sovereignty, competition, and government regulation.
b. Analyze how each type of system answers the three economic questions and meets the broad
social and economic goals of freedom, security, equity, growth, efficiency, price stability, full
employment, and sustainability.
c. Compare and contrast strategies for allocating scarce resources, such as by price, majority rule,
contests, force, sharing, lottery, authority, first-come-first-served, and personal characteristics
ECONOMIC SYSTEMS
• An economic system is a system of
production and exchange of goods and
services as well as allocation of resources
in a society.
• The system is determined by who answers
the 3 basic economic questions
1. What goods & services to produce?
2. How should these goods & services be produced?
3. Who gets to consume these goods & services?
TRADITIONAL ECONOMY
• Traditional Economy – an economic system that is based on customs and beliefs.
– People will make what they’ve always made.
– They do things the same way as their parents and grandparents.
– People are not free to make their own decisions on what they want.
• Often involves bartering – exchanges with no money involved
• Examples of these societies do not really exist any more. Native American societies and India in the past were like this.
COMMAND ECONOMIES
• Command Economy – One in which a central authority
makes all economic decisions about how best to
allocate resources.
• Examples of these economies include
Cuba, North Korea, and China.
http://dailysignal.com/2015/07/28/escape
d-refugee-hyeonseo-lee-reveals-what-
life-is-like-in-north-korea/
http://www.usatoday.com/story/news/world/20
13/04/13/north-korea-factoids/2078831/
MARKET ECONOMY
• Market Economy – system where the laws of supply and demand
direct the production of goods and services
• Buyers and sellers answer the economic questions as they come
together to exchange goods and services.
– Buyers/consumers are king!
Sometimes called consumer sovereignty.
• Examples include the USA, Great Britain and Japan
MIXED ECONOMY
• Market + Command = Mixed Economy
• Technically there are no pure market or command economies.
To some extent, all existing economic systems demonstrate
characteristics of both systems and can be called mixed
economies.
– Economies are usually closer to one type of
economic system than the other.
• People/businesses own most resources and
determine what & how to produce, but the
government may regulate certain industries.
CONTINUUM OF ECONOMIC SYSTEMS
https://www.youtube.com/watch?v=5xgwYRX19VU
ECONOMIC SYSTEMS STAND AND SORT
• Each of you will receive a descriptor strip facedown. Leave it facedown until I tell you to turn
it over.
– Notice our Economic Systems signs around the room.
• When instructed, turn over your descriptor strip then
– Think about which economic system it describes
– Go stand by the economic system sign you believe fits
• Discuss with others at your economic system – are you with the right economic system – be ready to
share in a minute
– After sharing, tape your description strip on our anchor chart under the correct economic system!
PAPER AIRPLANE ECONOMIES
• Pick a slip to see what type of economy you’ll be
working with.
• When instructed, to the set of desks for your
economic system.
• Read the directions for your economy.
• Do NOT start until you’re instructed to do so!
ALLOCATION STRATEGIES
Allocation strategies are the methods available to societies as they
seek to answer the third economic question of who receives what has
been produced.
• Following are a few allocation strategies:
– Price - the forces of supply and demand to determine a market price
– Authority - based on the decisions of a power person or group of people
who make most of the decisions about who gets to obtain a good, service, or
factor of production
– Force - goods, services, and factors of production are given or taken away
under using threats
ALLOCATION STRATEGIES
• Following are more allocation strategies:
– Lottery - random selection, gives everyone who wants the good, service, or
factor of production equal odds of obtaining it
– First come, first served - allows people to receive a good, service, or factor
of production if they get to it first or are one of the people close enough to
the front of the line to receive the good, service, or factor of production
before there are none remaining.
– Majority rule - a group of people who have control over a good, service, or
factor of production vote to decide how it will be distributed
– Personal characteristic - resources to be distributed based on need or
merit
Who Gets the Cookies?
1. There are four people in a group.
2. Write the name of each of your group members in
the space beside the word “alternatives.” What
does alternatives mean?
3. Leave “criteria” blank. We will do this together!
1. Write majority rule in the first blank under
criteria.
2. Give each person 10 seconds.
3. In 10 seconds tell the group why you should get
the cookies.
4. Vote for each person.
5. Give the person with the most votes a (+) and give
everyone else a (-) sign.
1. Write random selection in the second blank
under criteria.
2. Ask group members to write their names on slips
of paper. Fold up the slips.
3. The teacher will pick a slip for each group.
4. Give the person whose name was picked a (+) and
give everyone else a (-) sign.
1. Write authority in the third blank under criteria.
2. The person’s name chosen for random selection
(lottery) is now the king or queen.
3. The king or queen commands that one person in
the group (other than him- or herself) should get a
(+) sign. Everyone else gets a (-) sign.
1. Write competition in the fourth blank under criteria.
2. Play best out of three in a game of rock-paper-scissors
with a partner in your group.
3. The winning partner will play the other winning partner.
4. The final winner should get a (+) sign. Everyone else gets
a (-) sign.
1. Count up the total (+) signs for each person.
2. The person with the most (+) signs gets the cookies.
Who Gets the Cookies?
1. Which allocation strategy do you think is most efficient? Why?
2. Which allocation strategy do you think is most fair? Why?
3. What do you think is more important, economic efficiency or economic equity
(fairness)? Why?
4. How satisfied were you with the methods used to allocate the cookies? Explain.
5. What benefits and/or costs do you foresee if our government allocated public goods
and services in the same way?
6. Look at the full list of allocation strategies. For each of the strategies, identify one
thing in the United States that we allocate using that strategy.
7. Look at the full list of social economic goals. Which two goals do you think are valued
most highly in the United States? Give evidence to support your assertion.
ECONOMIC GOALS
• https://study.com/academy/lesson/economic-goals-for-the-us-economy.html
SOCIAL ECONOMIC GOALS MINI-POSTER
• Use your wonderful colored pencils to illustrate each of our social economic goals.
• Due tomorrow at the beginning of class.
ECONOMICS
D AY 6 – W E D N E S D AY, J A N U A RY 1 7 T H
MONDAY, JANUARY 22ND
• Good morning/afternoon!
• As you come in, please:
– Sit in your assigned seat
– Front table – pick up your Expedition Econ SSEF6 and start completing it
by Power Reading your Unit One Summary to find all the answers!
CLASS UPDATES
• Due to our wonderful winter weather days:
– Unit One test pushed back to this Wednesday (need a Kleenex?)
– We’ll be finishing up fast today and tomorrow (need 100% of your brain –NO distractions!)
– Remember:
• You should have been completing your Unit One Study Guide all along so this fast finish shouldn’t be too stressful (right?!?)
• Unit One Quizlet will be shutdown at midnight tomorrow so finish up
• Unit Assignment Cover Page will be distributed tomorrow. If you’ve been keeping everything in your 3-ring binder your life is low stress/low mess right now! (right?!?)
CLASS UPDATES
• Synergy has been updated for:
– Signed syllabuses
• Last call is by this Friday!
– Class materials
• Ditto – last call is this Friday to receive credit in Synergy
• Need to ask me in quiet times – before bell, during solo work, tutoring, etc. Do NOT ask me in the
middle of a lesson (taking off points is an option!)
– Techie sign-ups
• You’re getting a summary of what you’ve gotten credit for so far
• If you’re missing anything, get signed up by this Wednesday and return your Techie Sign-up Summary with
your Unit One papers BEFORE the test. I’ll update Synergy as needed.
CLASS UPDATES
• Stuff to Remember:
– Tutoring with Mrs. Powell
• Tuesday – Unit One Study Session!
• Thursday – Unit One celebration!!!
– Open House this Wednesday
• Hope to see you and your family there!
LET’S REVIEWSINCE LAST WEEK SEEMS LIKE A LONG TIME AGO…
Economic Systems Card Sort
• Each of you will get an Economic Systems graphic organizer and a set of
descriptor strips
• Work with a quad-mate to figure out which descriptor strip goes with each
economic system (remember - some descriptions may fit more than one
economic system!)
– When you think you’ve got it right – raise your hand and I’ll come check your work
– If you’re good-to-go I’ll give you a glue stick to glue it all down!
TODAY’S LEARNING STANDARD
SSEF6 Explain how productivity, economic growth, and future standards of living are
influenced by investment in factories, machinery, new technology, and the health,
education, and training of people.
a. Define productivity as the relationship of inputs to outputs.
b. Explain how investment in equipment and technology can lead to economic growth.
c. Explain how investments in human capital (e.g., education, job training, and healthcare) can lead
to a higher standard of living.
d. Analyze, by means of a production possibilities curve: trade-offs, opportunity cost, growth, and
efficiency.
WHAT DOES THIS MEAN?
WHAT IS PRODUCTIVITY?
• We know from Friday that:
– Productivity is measured as the quantity of output per unit of input.
– Efficiency means getting the most output from your inputs (i.e. not wasting anything!)
• Increases in efficiency can be achieved through division of labor and specialization
• An increase in productivity means
– producing more goods and services with the same amount of resources,
– producing the same amount of goods and services with fewer resources or
– a combination of the two possibilities.
• Over time, productivity growth means that the average worker is producing
more per hour, which means that the average standard of living in the economy
will be higher.
INVESTING IN EQUIPMENT, TECHNOLOGY & EDUCATION
• Economic growth results when an economy can increase its total real output
or real GDP, or its real output per person.
• Economic growth comes from several sources:
– improvements in the education, experience and skill level of the workforce, sometimes called human
capital;
– greater amounts of physical capital, that is, plant and equipment per worker;
– improved technology.
• Economic growth is critical to job-creation and
economic well-being.
PRODUCTIVITY AND SCARCITY
• How does productivity co-exist with scarcity?
By making choices!
WHAT DO YOU THINK THIS MEANS?
ProductionWrite your ideas on the board!
WHAT DO YOU THINK THIS MEANS?
PossibilitiesWrite your ideas on the board!
WHAT DO YOU THINK THIS MEANS?
Production Possibilities
Write your ideas on the board!
HOW COULD YOU REPRESENT GRAPHICALLY ALL THE PRODUCTION POSSIBILITIES OF…
• A farmer who could
grow apples and/or
pears on their 6 acre
farm?
Introducing…
The Production Possibilities Frontier/Curve
Featuring the following simplifying assumptions…
1. a society that produces only two goods
2. the efficient use and full employment of resources
3. fixed technology
4. a single snapshot in time
Production Possibilities FrontierProduction Possibilities Frontier
Production Possibilities Frontier
A B C D E F G
units of
apples 6 5 4 3 2 1 0
units of
pears 0 1 2 3 4 5 6
Production Possibilities FrontierProduction Possibilities Frontier
Production Possibilities Frontier
Production Possibilities FrontierProduction Possibilities Frontier
Units of
Apples
Units of
Pears
units of
apples
units of
pears
A B C D E F G
units of
apples6 5 4 3 2 1 0
units of
pears0 1 2 3 4 5 6
6
5
4
3
2
1
1 2 3 4 5
6
A
B
C
D
E
F
G
Production Possibilities FrontierProduction Possibilities Frontier
PRODUCTION POSSIBILITIES…
Production Possibilities Frontier/CurveThe production possibility curve is a hypothetical representation of the
amount of two different goods that can be obtained by shifting resources from
the production of one, to the production of the other.
The curve is used to describe a society's choice between two different goods
Sometimes called the Production Possibilities Frontier
https://www.youtube.com/watch?v=O6XL__2CDPU
units of
apples
units of
pears
A B C D E F G
units of
apples6 5 4 3 2 1 0
units of
pears0 1 2 3 4 5 6
6
5
4
3
2
1
1 2 3 4 5 6
A
B
C
D
E
F
G
Production Possibilities FrontierProduction Possibilities Frontier
Illustrates Opportunity Cost
Opportunity Cost =
What you give up if you choose something else
units of
apples
units of
pears
6
5
4
3
2
1
1 2 3 4 5
6
A
B
C
D
E
F
G
Constant Cost
One unit of pears costs one unit of apples.
One unit of apples costs one unit of pears.
Production Possibilities FrontierProduction Possibilities Frontier
units of
apples
units of
pears
12
10
8
6
4
2
1 2 3 4 5 6
A
B
C
D
E
F
G
Constant Cost
One unit of pears costs two units of apples.
One unit of apples costs one-half unit of pears.
Production Possibilities FrontierProduction Possibilities Frontier
Let’s Practice!
CHECKPOINT QUESTION #1
. According to the diagram at right, what is the
opportunity cost of producing 400 refrigerators?
A. 600 refrigerators
B. 300 automobiles
C. 100 automobiles
D. 200 refrigerators
Automobiles
600
300
400
200
Re
frig
era
tors
CHECKPOINT QUESTION #2
According to the diagram at the right, what is the
opportunity cost of producing 200 automobiles?
A. 200 refrigerators
B. 300 automobiles
C. 100 automobiles
D. 400 refrigerators
Automobiles
600
300
400
200
Re
frig
era
tors
ACDC Monsters, Inc.
https://www.youtube.com/watch?v=tW4G5IPpzFY
PRODUCTION POSSIBILITIESYOUR WAY!
PRODUCTION POSSIBILITIESYOUR WAY!
PRODUCTION POSSIBILITIESYOUR WAY!
PRODUCTION POSSIBILITIESYOUR WAY!
PRODUCTION POSSIBILITIESYOUR WAY!
Make sure both of your names are on your Production Possibilities Poster and
stack them up with your worksheet at the front of the class.
We’ll finish them tomorrow!
ECONOMICS
D AY 7 – T U E S D AY, J A N U A RY 2 3 R D
TUESDAY, JANUARY 23RD
• Good morning/afternoon!
• As you come in, please:
– Sit in your assigned seats
– Front table – pick up a Unit One Review Crossword Puzzle and complete it with a
partner!
• FYI –Your Unit One Assignments Cover Page is on the back side – when you turn in
your Unit One Assignments tomorrow just make sure the Assignments Cover Page
side if facing up
CLASS UPDATES
• Remember:
– Tutoring this afternoon!
• Study Session for Unit One Test tomorrow
KEY CONCEPTS TO KNOW
SSEF1Scarcity
Factors of Production
Profit Motive
Opportunity Cost
SSEF2Rational Decision-Making
Marginal Cost & Marginal Benefit
Incentives
Positive Incentives
Negative Incentives
SSEF3Division of Labor
Specialization
Voluntary Exchange
SSEF4Economic Systems
3 Basic Economic Questions
Economic Goals
Allocation Strategies
SSEF5Role of Government in
Economy
Public goods & services
Government regulations
SSEF6Productivity
Inputs and Outputs
Investment driving growth
Production Possibilities Curves/Frontiers
Opportunity Cost
Growth
Efficiency/Inefficiency
TODAY’S LEARNING STANDARD
SSEF6 Explain how productivity, economic growth, and future standards of living are
influenced by investment in factories, machinery, new technology, and the health,
education, and training of people.
a. Define productivity as the relationship of inputs to outputs.
b. Explain how investment in equipment and technology can lead to economic growth.
c. Explain how investments in human capital (e.g., education, job training, and healthcare) can lead
to a higher standard of living.
d. Analyze, by means of a production possibilities curve: trade-offs, opportunity cost, growth, and
efficiency.
PRODUCTION POSSIBILITIES CURVE QUICK REVIEW
What is it?
a hypothetical representation of the amount of two different goods that can be produced by shifting
resources from the production of one, to the production of the other
What does it show?
used to describe/illustrate a society's choice between two different goods
How can we determine opportunity cost?
OC = what we give up (#2 choice) if we choose something else
Practice – what is Sarah’s OC if she decides to add an 7 hour work shift?
What do all the points on the PPC represent?
All the production possibilities if 100% of current resources are
used efficiently
SO A PPC REFLECTS ‘CURRENT’ RESOURCES…
units of
apples
units of
pears
6
5
4
3
2
1
1 2 3 4 5
6
A
B
C
D
E
F
G
I
Can this society produce at production combination I?
Production Possibilities FrontierSO A PPC REFLECTS ‘CURRENT’ RESOURCES…
No!Not with current
resources
Any points outside the
PPC are not achievable
given current resources
units of
potatoes
units of
apples
6
5
4
3
2
1
1 2 3 4 5
6
A
B
C
D
E
F
G
I
Can this society produce at production combination H?
H
WHAT ABOUT INSIDE THE PPC?
Yes!But they don’t want to.
Any points inside the PPC mean
some resource/s are being wasted
and productivity is lower than it
could be
Events that can expand production possibilities outward…
•A technological advance (remember – a technology is anything that makes life easier)
• railroad cars
• refrigeration
• computers
•An increase in human or natural resources
• population increase
• new discoveries
•Capital investment
• new factories
• new infrastructure
CAN WE MOVE THE PPC?
CAN WE MOVE THE PPC?
Events that can expand production possibilities inward, which means productivity
has gone down…
• Loss of resources
• An economic depression
• Natural disasters
• War
• Disease
units of
capital
goods
units of
consumer
goods
6
5
4
3
2
1
1 2 3 4 5
6
A
B
C
D
E
F
G
Production Possibilities Frontier
One unit of capital goods costs one unit of consumer goods.
One unit of consumer goods costs one unit of capital goods.
DOES IT MATTER WHICH TWO ITEMS ARE ON OUR PPC? It can!
For example:
Capital vs. Consumer
Goods Goods
Think…
Equipment to vs. Consumable
Make things Short Term
Longer Term Items
Investments in capital goods
benefits an economy by helping
them to produce more in the
future
Vs.
Consumer goods provide shorter
term benefits
CHECKPOINT QUESTION #1
What BEST explains the shift of the production
possibilities curve from P1 to P2?
A. improvements in agricultural technology
B. inflationary increases in prices
C. higher costs of producing computers
D. higher costs of producing televisions
CHECKPOINT QUESTION #2
If a point falls inside the curve, what does that
mean for production?
A. Efficient use of resources
B. Inefficient use of resources
C. New technology
D. Increase in resources
Technologia
• Imagine you are a citizen of Technologia, a country that produces two goods:
– Smartphones
– Tablet computers
• What do these two goods have in common?
– Both digital technology
– Both wireless
– Both have touch screens
Coltan• Coltan is a heat-resistant ore that can
hold a strong electrical charge and is
used in making the capacitors needed
to produce touch screens for both
smartphones and tablet computers.
• Coltan is rare. Almost all the deposits
are found in African countries such as
the Democratic Republic of Congo.
– Source: University of Waterloo Earth Sciences
Museum (http://www.uwaterloo.ca/earth-sciences-
museum)
Technologia’s PPF
• Simulation of smartphone/tablet production
• Five students per team; each person can handle only one card at a time.
– Pull card from “coltan” box.
– Turn card to appropriate side.
– Pass to next person.
– Place in box with appropriate label.
– Repeat until coltan runs out.
Technologia’s PPF Simulation
Technologia’s PPF Simulation
First person
pulls a card and
turns it to
“Tablet”
Technologia’s PPF Simulation
Passes the
card down
the line …
TA B L E 1 . 1 : S m a r t p h o n e a n d Ta b l e t C o m p u t e r P r o d u c t i o n P o s s i b i l i t i e s
Round
(point)
Number of
smartphones
Number of tablet
computers
1 (A)
2 (B)
3 (C)
4 (D)
5 (E)
6 (F)
Technologia’s PPF
Tablets
Sm
art
phones
0
5
10
15
20
25
30
0 5 10 15 20 25 30
Technologia’s PPF
• Increase in the
amount of coltan
available for
production
• PPF shifts “out,” away
from the origin
0
5
10
15
20
25
30
0 5 10 15 20 25 30
Sm
art
phones
Tablets
Technologia’s PPF
• Increase in
productivity for
smartphones
• One unit of coltan
can produce two
smartphones
• PPF has shifted
outward, away from
origin0
10
20
30
40
50
60
0 10 20 30 40 50 60
Sm
art
phones
Tablets
ECONOMICS
TODAY’S LEARNING STANDARD
SSEF5 Describe the roles of government in the United States economy.
a. Explain why government provides public goods and services, redistributes income, protects
property rights, and resolves market failures.
b. Explain the effects on consumers and producers caused by government regulation and
deregulation.
OVERVIEW
• Government has an active role in establishing a framework or rules of the game
in economic life.
• In the United States, this activity involves:
– Preserving and fostering competition
– Providing information and services to enable the market to work better
– Providing certain public goods
– Offering some economic security and income redistribution to individuals
– Assuring a sound monetary system
– Promoting overall economic stability and growth
– Providing military protection
OVERVIEW• Markets perform well in providing most goods and services of everyday life: groceries, restaurant
meals, clothing, movies and cars.
• Nevertheless, there is a role for government in areas where markets fail or are inefficient.
• Some roles of government include protecting the environment, helping the poor and providing
national defense.
• Governments also provide public goods.
– Roads, parks, police, fire departments, etc.
Political opinions differ about how extensive the role of government should be in managing the
economy.
• The paradox of good government is that it must be strong enough to perform its appropriate roles,
but weak enough that it does not intervene excessively in people's lives.
• Although there is a role for government, we cannot assume that it will perform that role well.
• There are and have been policies that hurt the poor, harm the environment and protect monopolies.
PUBLIC GOODS AND SERVICES
• Most goods and services produced in the
marketplace are private goods and
services.
• This kind of good or service is purchased
by a consumer who desires it and can
afford it, and then consumed only by that
individual or anyone he or she gives it to.
• But some goods and services must be produced
by the public sector or government.
• Public goods and services are paid for through tax
dollars and are available to everyone, even those
who do not pay taxes.
• That means taxpayers have an incentive to use
public goods, and try to get more of them
produced, while shirting tax burdens to others.
• This is known as “free riding.”
PRIVATE GOODS AND SERVICES PUBLIC GOODS AND SERVICES
PROPERTY RIGHTS
• Property rights refer to the legal ownership of resources, which include the right to own, use
and sell them.
• Property rights are essential to the transactions in a market economy, and one of the essential
roles of government in a market-oriented economy is to protect property rights.
– When goods, including everything from cars to groceries, are bought and sold, a property right is
transferred from one party to the other.
– Your ownership of your own labor, that is, your property rights in your own labor, is what gives you
the right to be paid for your work.
• Without property rights and ownership, firms would lack any reason to build factories,
produce and innovate, because they wouldn't be able to keep what they made or earned.
• Similarly, people and firms would have a greatly reduced incentive to save or invest, because
they wouldn't be confident of receiving the future value from doing so.
MARKET FAILURES
• A market succeeds when it brings together a willing buyer and willing seller to make a mutually
beneficial transaction in a way that satisfies the parties involved.
• However, there are certain well-recognized conditions under which market failure occurs; this
means either that a market transaction affects third parties not involved in the transaction or
that a market has difficulty in providing certain kinds of products.
MARKET FAILURESHere are some examples of market failure.
• First, externalities are situations in which a market transaction affects a third party who is not
part of the transaction.
– A classic example is pollution, where people who do not purchase the good whose production
created the pollution must nevertheless face polluted air or water.
• A second market failure is one in which the private market is unable to provide the good or
service.
– Two examples of this are national defense and police protection.
– It is very difficult for the private market to charge individuals for these services.
– This means that this role falls to the Government.
• Also, it should be emphasized that the prices that emerge from market exchanges provide
buyers and sellers with far more information relevant to their decisions than would otherwise
be available.
EX AMPLES OF GOVERNMENT REGUL ATION AND DEREGUL ATION AND THEIR EFFECTS ON CONSUMERS AND PRODUCERS
• Is there too much government regulation or too little?
• Who answers that question, and on what basis?
• Many critics have cited the total cost of government regulation and claimed that there is too
much regulation.
• The U.S. Office of Management and Budget recently provided a report to Congress on the
overall costs and benefits of federal regulations suggesting that the critics have failed to
accurately consider all of the benefits resulting from regulation.
• The report goes on to emphasize the importance of applying cost-benefit analysis when
making changes in regulatory policy – in other words comparing the expected costs of a new
policy or a change in an existing policy to the expected benefits.
ECONOMIC FUNCTIONS OF GOVERNMENT
• SSEF5 The student will describe the roles of government in a market economy.
a. Explain why government provides public goods and services, redistributes income, protects
property rights, and resolves market failures.
b. Give examples of government regulation and deregulation and their effects on consumers
and producers.
WOULD YOU…?
• If you have answered no to
these questions, then you
understand why we need
government interaction in the
economy.
• If you answered
yes…well…congrats! You’re a
great human being.
• Pay for some other child’s
school?
• Pay for somebody else’s bus ride?
• Pay to clean a restroom at a
park?
• Pay to build a new road outside
of your house?
GOVERNMENT’S ROLE
1) Provide a Legal System
2) Maintain Competition
3) Public Goods and Services
4) Redistribute Income
5) Correct Market Failures
6) Stabilize the Economy
PROVIDE A LEGAL SYSTEM
• Make and enforce laws to
protect private property
rights
• Examples:
–courts, monetary
system
MAINTAIN COMPETITION
• Regulates monopolies
• Examples
–Anti-trust laws
PUBLIC GOODS AND SERVICES
• Uses tax dollars to provide
goods and services that private
individuals wouldn’t provide
• Benefits everyone
• Examples:
– Parks, national defense,
schools
REDISTRIBUTE INCOME• Taxing large income groups to provide for those in need
• Examples: social security, Medicare, Medicaid
RESOLVE MARKET FAILURES
• Corrects externalities(unintended side
effects or reactions to an action)
• Positive externality- unintended
benefit
• Negative externality- unintended
cost
• Examples:
– Environmental pollution, subsidies,
education
STABILIZE THE ECONOMY
• Reduces unemployment and
inflation and promotes
economic growth
• Examples
– Government budgets,
monetary supply
ECONOMICS
W E D N E S D AY, J A N U A RY 2 4 T H
WEDNESDAY, JANUARY 24TH
• Good morning/afternoon!
• As you come in please,
– Sit in your alphabetical testing seats
– Pull out your Unit One assignments and turn them (on the front table) with
your Assignments Cover Page on top
CLASS UPDATES
• Advisement starts today!
LET’S KAHOOT IT!
• Pull out your smart phone and go to your web browser.
• Enter our session code and join our review
• Remember your Kahoot name needs to include:
– Your first name or your last name
– Keep it clean or you’ll get deleted!
• Prizes for the winners!
NOW…QUICKLY AND CALMLY…
• Pack up your things
• Power down all electronics and put them in your bookbag.
• Then, put your bookbag/purse at the front of the room.
• As you come up to the front of the room, take a laptop back to your seat
OUR UNIT ONE TEST
• We’ll be taking our test with the laptops today
TIME FOR OUR FIRST UNIT TEST!
• Remember our ‘Test Mode’ until the last test is turned in:
– No electronics
– No talking
– No squawking (no noises or disruptions)
– No walking (raise your hand and I’ll come to you)
– No gawking (eyes on your own paper, keep your answer sheet covered)