bellwork 1. what do you expect to learn in economics? 2. what is your job as the economics student?
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Bellwork1. What do you expect to learn in
Economics?2. What is your job as the Economics
student?
Cornell Note Taking is emphasized here at THSEssential Question: What is Economics?
Questions Notes
Summary: Economics is the study of how people choose from limited resources to meet their needs and wants.
Introduction to Economics
1. Scarcity and Factors of Production2. Opportunity Cost
Essential Question: How do we allocate limited resources?
Making Choices
Need- something like food, air, shelter, water (necessary for survival)
Want- item we desire—not essential to survival
CAN’T HAVE EVERYTHING YOU NEED OR WANT—YOU HAVE TO MAKE CHOICES!!
Essential Question: How do we allocate limited resources?
What Is Economics? Economics is the study of how people seek
to satisfy their needs (essentials) and wants (desires) by making choices.
Decisions have costs. Economics studies the costs, benefits, expectations and results of choices.
For example: You must choose how to spend your time Businesses must choose how many
people to hire
Essential Question: How do we allocate limited resources?
Scarcity and Shortages Scarcity occurs when
there are limited quantities of resources to meet unlimited needs or desires
ALL GOODS AND SERVICES PRODUCED ARE SCARCE.
Shortages occur when producers will not or cannot offer goods or services at current prices
Can be long-term or short-term.
Holiday seasons Wars and droughts
Scarcity versus Shortage
What is the difference?•
Essential Question: How do we allocate limited resources?
The Factors of Production Land All natural resources that are used to
produce goods and services. Labor Any productive physical or mental
effort a person devotes to a task for which that person is paid. Workers, laborers.
Capital Any human-made resource that is used to create other goods and services. Physical Capital- machinery and
equipment made by labor to increase the productivity of labor.
Human Capital- the knowledge and skills that makes labor more productive.
Essential Question: How do we allocate limited resources?
The Factors of Popcorn Production
Land
Popping Corn
Vegetable Oil
Labor
The human effort needed to pop the corn
Capital
Corn-PoppingDevice
Essential Question: How do we allocate limited resources?
The Economic Problem What goods and services should an
economy produce? – should the emphasis be on agriculture, manufacturing or services, should it be on sport and leisure or housing?
How should goods and services be produced? – labour intensive, land intensive, capital intensive? Efficiency?
Who should get the goods and services produced? – even distribution? more for the rich? for those who work hard?
Essential Question: How do we allocate limited resources?
Opportunity CostDefinition – the cost expressed in
terms of the next best alternative sacrificed
Helps us view the true cost of decision making
Looks at what is given up when a decision is made.
Implies valuing different choicesEssential Question: How do we allocate limited resources?
FIVE appealing VACATION Destinations…
Hawaii ParisDunns River
Falls, Jamaica
AlaskaIreland
Volunteer: What is your first choice? What is your second choice?
Making Economic DecisionsMaking Economic Decisions1st Choice is what you would choose to do
2nd Choice is your opportunity cost (you give it up to do option 1)
Essential Question: How do we allocate limited resources?
How does opportunity cost affect decision making?
Trade Offs Trade-offs are all the alternatives that we give
up whenever we choose one course of action over others.
The most desirable alternative given up as a result of a decision is known as opportunity cost.
“Time for money and wheels”-get a part time job (time) in order to get a car
Marginal Thinking Process of deciding whether to use a resource Cost /benefit analysis-what you will sacrifice
Essential Question: How do we allocate limited resources?
The Decision-Making Grid
Economists encourage us to consider the benefits and costs of our decisions.
Benefits • Enjoy more sleep• Have more energy during the day
• Better grade on test• Teacher and parental approval• Personal satisfaction
Decision • Sleep late • Wake up early to study for test
Opportunity cost • Extra study time • Extra sleep time
Benefits forgone • Better grade on test• Teacher and parental approval• Personal satisfaction
• Enjoy more sleep• Have more energy during the day
Sleep late Wake up early to study
Alternatives
Karen’s Decision-making Grid
Essential Question: How do we allocate limited resources?
Thinking at the Margin When you decide how much more or
less to do, you are thinking at the margin.
Options
1st hour of extra study time
2nd hour of extra study time
3rd hour of extra study time
Benefit
Grade of C on test
Grade of B on test
Grade of B+ on test
Opportunity Cost
1 hour of sleep
2 hours ofsleep
3 hours of sleep
Essential Question: How do we allocate limited resources?
http://www.youtube.com/watch?v=PSU-_n81QT0
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