Today’s Agenda

Warm-upCheck signaturesScarcity ActivityNotes Factors of Production Chart

HW – NOTEBOOK CHECK THURSDAY!

Economics – What is it??

Essential Questions:What is Economics?

Why is Scarcity the basic economic problem?

Definition

Economics is:Study of human efforts to satisfy

unlimited wants

What does this mean in your own words?

The Problem:

The basic economic problem that ALL societies face is scarcity.

Scarcity – result of not having enough resources to produce all the things people would want

Needs vs. Wants

What is a need?Basic requirement for our survival

Ex: Water, food, clothing, shelterWhat is a want?

A way of expressing a needEx: wish for, crave, desire

TINSTAAFL

Is anything really “free”?TINSTAAFL = “There is NO such

thing as a free lunch”Even if YOU are not paying,

somebody paid for the production of it

Coupons – is this really free?

3 Questions of how to use limited resources.

WHAT to produce? Society can’t have everything it

wants, so it must decide what to produce

Example – Should the U.S. worry about making more military weapons or more food/shelter to take care of the homeless?

3 Questions of how to use limited resources.

HOW to produce?What method will be used to

produce things?Should factory owners use more

machinery and less workers or more workers and less machinery?

3 Questions of how to use limited resources.

FOR WHOM to produce?Who will receive the existing

items/supplies? Who is it allocated to?

Today’s Agenda 9/10

Warm-upNotebook CheckReview Factors of ProductionGoods/Services NotesVocab Activity

Goods

Good An item that is economically

useful (satisfies a want)

Goods

Consumer Goods Intended for final use by individualsExamples: Ipods, Cell Phones

What are some items around the class that would be consumer goods?

Goods

Capital Goods Manufactured goods used to produce other

goods and servicesExample: an oven in a bakery

Services

ServiceWork that is performed for someoneEx. Barber

What are some examples of a service we see in our everyday lives?

Values

Value is a worth that can be expressed in dollars and cents.

The PARADOX OF VALUE – When necessities have little value, and non-necessities have much higher value.The current price of gold is $993 per ounceThe current price of water is $ 4.50 for 12

bottles

How is Value calculated?

Value = Scarcity + Utility

Scarcity means…..

Utility - the ability to be useful or provide satisfaction

How does gold, diamonds, and other jewels fit into the paradox of value?

Wealth

Wealth is:The accumulation of products that are

tangible, scarce, useful, and transferable.

Wealth is the accumulation of many things that have VALUE

Who do you consider to be wealthy?

Today’s Agenda

Circular Flow of Economic Activity ChartActivity

Critical Thinking QuestionsProject Assignment

Essential Questions

How do consumers and businesses interact with each other in the economic flow of activity?

Circular Flow of Economic Activity

___________________Markets

Examples:

___________________Markets

Examples:

Businesses Individuals

__________Income

_________ Spending

Income from ___________

Payments from _____________

Goods _________

Land_________

Labor _________

__Goods___________

Buy ___________________

• Businesses – the companies providing goods and services

• Individuals – the consumers (people, us) that want to buy/use the goods and services

Markets

• Product Market (top box)– where businesses sell their goods and services to consumers– Individuals spend their money in product

markets and get goods and services– Businesses get INCOME from consumers

buying goods and services

ProductMarkets

Businesses Individuals

BusinessIncome

ConsumerSpending

Income from ___________

Payments for

Goods and

Services

Land_________

Labor _________

Goods and

Services

Buy ___________________

Markets

• Factor Market (bottom box)- where productive resources are bought and sold- businesses hire labor for wages/salaries, get

land, etc. - PAYMENTS for resources (Factors of Production)

- Individuals get INCOME from working in factor markets

ProductMarkets

Factor Markets

Businesses Individuals

BusinessIncome

ConsumerSpending

Income from

Working/resources

Payments for

Resources

Goods and

Services

LandCapital

Labor Entrepre

neurs

Goods and

Services

Buy

Productive

Resources

Critical Thinking Question

• Answer the following question and hand in when completed– As a consumer, what role do you play in the

circular flow of economic activity?