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Unit 1 Scarcity & Choice How do people make choices?
Unit 1 Scarcity & Choice
How do people make choices?
EQWhat is your economic literacy
score?
Your dreams Your future
What will make you Needs and Wants… Source of Income… Intangibles that money can’t buy…
Create a visual using pictures, images, drawings, words
To the old and true adage,
"If you think education is
expensive, try ignorance,"
we would add a stronger emphasis and a greater awareness of
the astounding costliness of economic
illiteracy.
What is Economics?
Economics is the study of how individuals and societies use their scarce resources to satisfy their unlimited wants.
Scarce = limited Resources = things used to make
other things (goods & services)
Land
Labor
Capital
Entrepreneur
Organize Resources
L and
G o od o r S ev ice(O u tp u t)
L ab or C a p ita l
R e so u rces(In p u ts)
Consumers buys
things they need or want.
Producers make
money.
Basic Economic TermsEconomics The study of how individuals and societies
use their scarce resources to satisfy unlimited needs.
Scarcity Limited; time, money, resources, and space
Resources Factors of production; land, labor, capital“Things used to make other things”
Land Items found in nature
Labor Work done by people
Capital Tools, equipment, factory, building NOT $
Goods Tangible items of value; computer
Services Intangible items of value; fixing a car
Entrepreneur
Start a business; goal to make $
Producer Business who sells goods/services
Consumer People who buys goods/services
How do you deal with scarcity?
Your alarm went off this morning… You have $1 left on your lunch account…
CONGRATULATIONS!!!! You have just received your HS
diploma What are you going to do with your
life?
Decision-making tool #1
Cost-benefit analysis This decision-making tool is best use when solving the
problem of scarcity when you need to compare positives and negatives of which action to take or wise choice to make.
Alternative: any possible course of action in a given situation.
Benefit: positive consequence of actionCost: negative consequence of actionTrade-off: giving up one thing to gain anotherWise Choice: decision which gives the greatest benefit,
least cost
Cost-Benefit Analysis
Alternative
Benefit Cost
School Educ, higher paying job
Time & Money
Work Money Less career earnings & time
Military Pride, $ for school
Time & individual freedom
Wise choice is…
Decision-making tool #2
PACED decision-making grid This decision-making tool is best use when solving
the problem of scarcity in which you want to find the wise choice which best meets your needs.
Problem: state the situation, which is “best” for me.
Alternatives: identify possible courses of action Criteria: identify important featuresEvaluation: rank alternatives; best to worstDecision: select alternative with the greatest benefit,
least cost
PACED
Alternative Tuition Independenc
e FriendsProgra
mTotal
MU 1 3 2 2 8
BMSU 2 1.5 1 3 7.5
EU 3 1.5 3 1 8.5
Wise choice is…BMSU
Problem: Which is best for me.
Ranking 1 is best; 2 is ok; 3 is worst
Decision-making Project
OPTION 1: Cost-benefit analysis ~ 6 points; 4 points
This decision-making tool is best use when solving the problem of scarcity when you need to compare positives and negatives of which action to take or wise choice to make.
OPTION 2: PACED decision-making grid ~ 16 pts; 4 pts
This decision-making tool is best use when solving the problem of scarcity in which you want to find the wise choice which best meets your needs.Paragraph ~ 5 points
PROJECT TOTAL= 35 points
Scarcity,Trade-off & PPC
Production Possibilities Curve (PPC) illustrates the maximum output combination of two goods; “on the line”
Points A & B desirable; “best”?
Point C is not possible
Point D is inefficientTo increase production of guns;
Must decrease production of butter.
Ravinia pp. 21-23 #1-7
Economists
Study the way in which individuals and society use their scarce resources to satisfy their unlimited wants.
Paid professionals that predict people’s behavior
Why did God create economists?
To make the weathermen look good! Ha ha ha
Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing.
(Myrdal & Hayek shared one in 1974)
A mathematician, an accountant and an
economist apply for the same job.
The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."
Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four." Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"
Economists Handy Dandy Guide
Why is Elvis reported as being alive? Use your “handy dandy guide” to solve the mystery!!!
