Goals

Explain the difference between needs and wants

Distinguish between goods and services

Describe the types of economic resources

Essential Question – what are economic resources?

The Main Idea

Businesses make money by offering goods and services to satisfy the wants and needs of consumers and other businesses. In this way, wants and needs drive the U.S. economy.

Graphic Organizer

1600s 1700s 1850s 1900s Present

Bartering and tradingcreated our

service-based economy

Farming created our agriculture-based economy

The Industrial Revolution started

the industry-based economy

The invention of computers created the information-

based economy

We live in the information age,

but still rely upon the other types of

economies

Which of these things do you want?Which do you need?

Graphic Organizer

Suppose you had $10. You could buy lunch or go to a movie.

LunchLunch MovieMovieNeed Want

An Abundance of Wants and Needs

Wants and needs determine what products and services businesses provide.

NeedsThings that are required in order to live

wantsThings that add comfort and pleasure to your life

Needs and Wants

Our needs and wants =

Unfortunately, they never end!

(infinite)

The U.S. Economy – some facts pg. 7

Guess who is the largest producer of goods and services in the world?– Yep, the U.S.!

Guess who consumes more than any other country?– Yep, the U.S.!

The U.S. Economy – some facts pg. 8

Guess who has twice as many shopping malls as they do high schools?– Yep, the U.S.!

Guess who produces more pounds of garbage per person per year?– Yep, the U.S.!

Satisfying Wants and Needs

Businesses provide goods and services to satisfy the wants and needs of businesses and consumers.

goodsThings that you can see and touch - tangibleservicesAre activities that are consumed at the same time they are produced – intangible

How Resources Limit the Ability to Satisfy Wants and Needs

No one has enough resources to satisfy all of their wants.

Economic resourcesAre the means through which goods and services are produced.

Three types of economic resources

Economic resources are called factors of production.

The 3 kinds of economic resources are:

Natural resources (land)

Human resources (labor)

Capital resources

1. Natural Resources

Raw materials supplied by nature

2. Human Resources

People producing goods and services

3. Capital Resources

People must have access to tools and equipment in order to convert natural resources into products.

Capital resources include buildings, equipment, and supplies

Also include $$$$$$– Build a factory, buy a truck, pay employees

Factors of Production and Chicken noodle soup

Natural Human Capital

Making the Most of Your Resources

You can make the most of your resources by making careful decisions about what to buy.

You work as an event planner for a local company. You are in charge of hiring a caterer for the company’s 10th anniversary celebration. You have bids from four caterers in town. One of the bids is from a caterer who is an old friend. His bid is higher than the three others.

Decision Making Would your relationship with the caterer affect which company you would hire? Explain your answer.

Answer

The event planner should recluse himself or herself from the decision-making process due to the conflict of interest. The employee has an ethical obligation to act in the best interests of the company.

????

How could a resource be used for one product result in a limited supply for another? Give examples

1. Describe the differences between a good an a service. Which is tangible and which is intangible?

A good is a product that is tangible, or can be touched.

A service is something that is offered for our benefit. It isintangible.

2. Define resources.

Resources are items people use to make or obtain what they need or want. Examples of resources include money, fuel, and labor.

Intro to Biz Management

Understand the basic economic problem

Explain the steps in the decision-making process

Essential Question: How do we use the decision making process in our daily activities?

The Basic Economic Problem

Individuals and businesses have unlimited wants and needs….this leads to a problem

ScarcityNot having enough resources to satisfy every need

The Basic Economic Problem

You earn $75 a week at a part time job. Do you spend it all on a new pair of kicks or save it so you have money for movie and pizza on Saturday

Economic decision-makingThe process of choosing which wants, among several options, will be satisfied.

Tradeoffs and Opportunity Costs

Seeing that we must make choices all the time, we are making tradeoffs…we have to give up something in order to get something.

Tradeoffs and Opportunity Costs

You didn’t buy the new pair of shoes so you could go to the movies and get pizza.

What is the tradeoff?

No shoes….or another option……

tradeoffWhen you give up something to have something else

Tradeoffs and Opportunity Costs•Economists evaluate an alternative by considering the opportunity cost of a decision

•The enjoyment of owning the shoes was the opportunity cost

Opportunity costsIs the value of the next-best alternative that you did not choose

Opportunity Cost

The benefit you get from your choice should be greater than the benefit from the next-best choice that you didn’t choose.

We as humans always try to make the best choice to benefit ourselves, naturally.

Opportunity Cost example

A person decides to quit his or her job and go back to school to increase their future earning potential. What is the opp cost?

A person decides to remain employed and not return to school to get a college degree. What is the opp cost?

Opportunity Cost example

If a city decides to build a hospital on vacant land it owns, what is the opp cost?

Answer - the opportunity cost is the value of the benefits forgone of the next best thing that might have been done with the land and construction funds instead

Class assignment

On a piece of paper, name at the top, list TEN situations where there is an opportunity cost present

Explain to me what the opportunity cost is in each situation.

Example – I chose to stay in and make power points instead of playing in the snow. The opportunity cost is me having fun playing outside.

The Decision-Making Process

Step 1

Step 2

Step 3

Step 4

Step 5 Act on your choice.

Define the problem.

Identify the choices.

Evaluate the advantages and disadvantages of each.

Choose one.

Figure 1.1

Step 6- Review Your decision

1. What is scarcity?

It is when you don’t have enough resources to satisfy all of your needs

2. When you give up something to have something else, you a making a _______?

Tradeoff

3. List the steps in the decision-making process.

Define the problem, Identify the choices, Evaluate the advantages and disadvantages of each choice, Choose one, Act on your choice, Review your decision.

4. Which country is the largest producer of goods and services?

USA