SECTION 1 : SCARCITY AD THE FACTORS OF PRODUCTION

SECTION 2 : OPPORTUNITY COSTSECTION 3 : PRODUCTION POSSIBILITY

CURVES

Chapter 1: What is Economics?

Section 1 Objectives

Explain why scarcity and choice are the basis of economics.

Describe what entrepreneurs do. Define the three factors of production and

the differences between physical and human capital.

Explain how scarcity affects the factors or production.

You have one minute…

Create a list of items you would buy from the supermarket if money were no object.

Scarcity and Choice

Need: something essential for survival Examples:

Want: something we desire but not necessary for survival Examples:

Goods: physical objects Examples:

Services: actions or activities that a person performs Examples:

Scarcity

Needs Wants

Scarcity and Economics

Forces people to make choices Limited amounts of goods and services are

available to meet unlimited wants Economics: the study of how people seek to

satisfy their needs and wants by making choices Individually In groups Government

Entrepreneurs

People who decide how to combine resources to create new goods and services

Must assemble the Factors of Production Land – natural resources Labor – effort people put forth to complete a task Capital – anything used to produce other goods and

services Physical capital Human capital

Section 2: Opportunity CostObjectives

Explain why every decision involves trade-offs.

Summarize the concept of opportunity cost. Describe how people make decisions by

thinking at the margin.

Trade-Offs

Bell Ringer: Page 8 Define trade-0ffs. List 3 trade-offs you

have made.

Trade-Offs

Trade-off: the act of giving up one benefit in order to gain another greater benefit

Individuals Businesses Governments

“guns or butter” “Like Santa with a wish list that cannot be satisfied, the

country enters the New Year with a needs list that far exceeds our revenue sources. It appears once again that is time to wage the debate of guns or butter…Citizens are simultaneously confronted with funding a war abroad and dealing with rising health costs, increased fuel costs and declining human services at home.” – Charles Bogue, “Guns or Butter,” Napa Valley Register

Writing: Trade-offs

Think about the quote we just read. In our current time, what should the government spend money on?

How to write for Mrs. Miles 5-8 paragraphs Introduction – Attention grabber, background

information, thesis statement Middle Paragraphs – point, counter-point, point IN

ALL MIDDLE PARAGRAPHS. Do not write a counter-point as its own paragraph. Do not write a point as its own paragraph.

Closing – Sum up your main points, restate your thesis Go!

Writing

“Like Santa with a wish list that cannot be satisfied, the country enters the New Year with a needs list that far exceeds our revenue sources. It appears once again that is time to wage the debate of guns or butter…Citizens are simultaneously confronted with funding a war abroad and dealing with rising health costs, increased fuel costs and declining human services at home.” – Charles Bogue, “Guns or Butter,” Napa Valley Register

In our current time, what should the government spend money on? Guns or butter? Explain acknowledging competing viewpoints.

Introduction Point, Counter-point, Point Point, Counter-Point, PointPoint, Counter-Point, Point Closing

Opportunity Cost

Opportunity Cost: the most desirable alternative given up as the result of a decision

What are some examples?

Thinking at the Margin

Thinking at the margin – whether to do or use some additional resource When is enough enough?

Cost/Benefit Analysis – sacrifice vs. gain Marginal cost – cost of adding one unit Marginal benefit – benefit of adding one unit

Decision Making at the Margin

Problem: Options Benefit Opportunity

Cost

Section 3

Bell ringer: How does a nation decide what and how much to produce?

Section 3: Production Possibility Curves

Objectives: Interpret a production possibilities curve. Explain how production possibilities curves show

efficiency, growth, and cost. Explain why a country’s production possibilities

depend on resources and technology.

Production Possibility Curves

Graph that shows alternative ways to use an economies productive resources

Capeland (it’s not a real place) (video) Watermelons or shoes?

21 million tons of watermelons 15 million pairs of shoes

Efficiency, Growth, and Cost

Efficiency The use of resources in such a way as to maximize the

output of goods and services Underutilization

The use of fewer resources than the economy is capable of using

Law of increasing costs As production shifts from making once good or service

to another, more and more resources are need to increase production of the second good or service