economics unit 1 notes 2017

Warm-Up/Check on Learning Exercises• I do not grade notes, but I will take grades on warm-ups

and check on learning exercises. Have a page dedicated to warm-ups and check on learning that way at the end of the week you can turn it in. It will be graded as a non-test grade and evaluated based on understanding and completion. Each day is worth 20 points, I do not do partial grading, so if Tuesday is not complete, you receive 0 points for that day. If you were absent a day write the day you were absent on your sheet.

What you will do in economics• Examine: how individuals , businesses, governments, and societies

chose to use scarce resources to satisfy their wants

• Organize, interpret, and analyze data about economic behaviors

• Develop theories about how the economy works

What is economics?The study of how individuals and societies satisfy their unlimited wants

with limited resources

Scarcity• The situation that exists because wants are unlimited and resources

are limited

• Give a pig a pancake

• Rudy https://www.youtube.com/watch?v=TY0LUIIwo8k

Why does scarcity matter?• YOU confront the issue of scarcity constantly!

• COL Activity #1• Wants • Resources

Check on Learning #1 • Write down one way you face scarcity

• Find a person in this class that has a different example than you and write it down

• Repeat above

• In a complete sentence write the 3 examples of how society faces scarcity

• Sentence stem: I face scarcity by _______. Others face scarcity by _______, and ____________.

Your Examples of scarcity

Warm-Up #2 • What is a principle?

• a fundamental truth or proposition that serves as the foundation for a system

Principles of Economic Thinking• Principle 1: SCARCITY FORCES TRADEOFFS-wants are unlimited/resources are limited-Tradeoff = giving up one thing to get another

Free lunch/summer examples

TIME IS AN INDIVIDUALS MOST SCARCE RESOURCE

Principles of Economic Thinking• Principle 2: Costs vs. Benefits• Individuals make choices based on the expected costs and benefits• Cost=what you spend in time, money, effort, and other sacrifices• Benefits=what you gain

COL#2• Creating a cost benefits analysis: Write 1 cost(-) and 1 benefit(+) for

each of the following• Riding a bike instead of driving a car• Sleeping an additional hour • Find 1 classmate near you that has a different cost and benefit• Repeat

Riding a bike vs Driving a car• Costs • Benefits

Sleeping an additional hour• costs • benefits

Production Possibilities Curve•Production Possibilities Curve is an economic model

that shows how an economy might use its resources to produce two goods

• The graph shows all possible combinations using the available resources and technology fully

•Graph factors in the three factors of production: land, labor, and capital

•Page 30 in book

Warm-Up #3• Yesterday we learned about trade-off

• Write in a complete sentence a trade-off that you recently made

• Talk with someone around you about your trade-off

Production Possibilities Curve• Page 30• Figure 2.5a• Straight line means the opportunity cost/tradeoff is equal at every

point on the graph

• The line shows the most efficient tradeoff

Production Possibilities Curve• Figure 2.5B• Curved line means that the opportunity cost/tradeoff is greater at

some points on the graph

• Attainable goals are inside the curve, unattainable outside the curve

Production Possibilities Curve• Figure 2.5c

• Changes in productivity/economy can shift the curve• -positive change=shift to the right/up• -negative change=shift to the left/down

COL#3 • You are going to create your own production possibility curve

• Chose 2 things you want to produce and create a labeled PPC(create your own numbers)

• Chose any point on your PPC that you want to produce at and write a sentence explaining why.

I want to produce ___ of product 1 and ___ of product 2 because

PPC Recap

Warm-Up• What is an incentive • Write down an example of positive incentive• Write down an example of a negative incentive• Find a class mate with a different positive and negative incentive• repeat

• Write a complete sentence explaining why one of your examples is an incentive

Positive Incentives

Negative Incentives

Principles of Economic Thinking• Principle 3: Incentives Matter• Incentive-something that motivates a person to take a

particular course of action-people respond to incentives in generally predictable ways-Two forms: positive and negative

-positive incentive: grades in school-negative incentive: jail time for breaking the law

3 Basic Economic Questions• All economic systems must answer these 3 basic questions1) What will be produced?2) How will it be produced?3) Who will it be produced for?

How each economic system answers these questions is what makes them unique

Economic Systems• Economic system- a society’s way of coordinating the production and

consumption of goods and services• Producer- a person/firm that makes goods and/or services• Consumer- a person that buys goods and/or services for personal use

• Economic systems exist to combat scarcity

• 3 types• -Capitalism• -Socialism• -Communism

Brochure Project

Expert Group Exercise• You will need to know(write in your notes) the property rights,

incentives(to work), economic freedom(is there any), competition(does any exist), and the governments role for your assigned economic system

• Talk in your groups about the possible answers

• This should take about 7 minutes, then we will switch information cards.

Economic Systems T Chart• Collaborate with someone next to you and develop a t chart or venn

diagram of how the 3 different economic systems answer the 3 basic questions(YES, put the chart in your notes, you may see it again on the test)

T Chart/Venn Diagram

Quizlet• https://quizlet.com/146527066/economics-unit-1-fundamentals-of-ec

onomics-vocabulary-flash-cards/

• Kahoot!

US Free Enterprise System• Free enterprise system: an economic system in which the means of

production are mostly privately owned and operated

• What we already know(work with your partner and write an example of each in your notes)• Incentives• Private property• Economic freedom• Competition• Limited role of government• Influenced by various economic philosophers

US Free Enterprise System Characteristics• property is privately owned by individuals or businesses as opposed

to government ownership• the primary incentive is for businesses to make a profit.• individuals are free to make economic choices and decisions based on

individual preferences and desires.

US Free Enterprise System Characteristics• competition is intended to produce the best product at the lowest

price• government interference in the economy is limited, yet government

protects property rights as expressed in the Constitution and manages business cycles through monetary and fiscal policies

Benefits of the US Free Enterprise(Capitalist) System• Freedom of consumers – consumers have the ability to purchase the

goods and services they choose, making their wishes known to producers through voluntary transactions.

Benefits of the US Free Enterprise(Capitalist) System• Freedom of producers – can produce what they want in order to

respond to consumer demand and make a profit.

• Variety of goods – the free enterprise system produces a wide variety of goods and services to meet consumers’ wants and needs.

Benefits of the US Free Enterprise(Capitalist) System• Responsive prices – prices in a free enterprise system respond to

changes in supply and demand, thus signaling producers and directing resources to respond to consumer demand.

Benefits of the US Free Enterprise(Capitalist) System• Investment opportunities – businesses can redirect resources from

being consumed today in order to create benefits in the future.

• Creation of wealth – sale of goods and services along with investment allows for profit and accumulation of wealth.

RECENT CHANGES IN THE BASIC CHARACTERISITICS OF THE UNITED STATES ECONOMY

• There are 4 passages describing different recent different changes in the US economy. Read and summarize(about 2-4 sentences) each of the four passages in your notes. You may, or may not, work with a(1) partner • Tip in summarizing: answer the W’s• Who- does it effect• What- is the change• Where- United States• When- did the change happen• Why- did the change occur

Economic Philosopher Project

Outsourcing

Bush Tax Cuts

Healthcare Reform

International Trade

Circular Flow Model

• A diagram that shows the circular movement of money, resources, and goods and services among households and producers in an economy.

Real World Examples• Real world examples Daniel applies for an after-school job at a

restaurant. This is the supplying of labor in the factor market; his wages will be a cost to a business, and income to a household.• Daniel uses some of his earnings to buy tennis shoes at the mall. This

is the purchase of goods in the product market; the payment for the shoes is revenue to a business, and consumption spending for a household.

Real World Examples• A farmer sells his crop of corn in the factor market. A processing

company buys it and turns it into packages of frozen corn. The packages of corn are then purchased by households to feed their families.

HOW GOVERNMENT ACTIONS AFFECT THE CIRCULAR-FLOW MODEL• Government can be added to the circular-flow model as both a

producer and consumer.

HOW GOVERNMENT ACTIONS AFFECT THE CIRCULAR-FLOW MODEL• Purchases goods and services in the product market• Purchases factors of production in the product market• Furnishes goods and services

HOW GOVERNMENT ACTIONS AFFECT THE CIRCULAR-FLOW MODEL• Collects taxes from both households and businesses• Transfers money to households and businesses

HOW THE CIRCULAR-FLOW MODEL IS AFFECTED BY THE REST OF THE WORLD

• https://www.youtube.com/watch?v=mN5HPJYJzus

Circular Flow Model Project