Today’s Objectives – Day 1

We will… Role Call and Syllabus review Economic Activity: Discovering Scarcity Chapter 1 Notes

You will… Understand the course and its expectations Have a better understanding of how scarcity

and how it connects to Economics Understand basic concepts of Economics

including scarcity, positive and normative economics and the 7 principle of Economics

Discovering Scarcity

1. Get into groups of 3 or 4 2. Scarcity Exercise

Activity Questions

1. How did this activity exemplify the economic principle of scarcity?

2. What were some of the thoughts behind choosing a preference?

3. How does scarcity affect your daily life? Think of an example.

ECONOMIC THINKINGWhat you need to remember to be

a good student of economics

What is Economics? Economics is…

A Social ScienceA study of how resources are used

to their fullest potentialNOT directly concerned with

money or politics or the stock market

When you are trying to make the most out of what you have you are doing…Economics

Macro vs. Micro What do you think is the

difference between the prefixes “macro” and “micro”?Write in on your note sheet

Compare it to a partner.

Macro vs. Micro Macroeconomics =

economic issues of a nation

Microeconomics = economic issues of the individual and/or firm

Examples of Types of Economics

What is an example of a macroeconomic issue?

What is an example of a microeconomic issue?

Positive and Normative Economics

Positive EconomicsGives a concrete estimate to an

issueFocuses on facts and cause and

effect relationshipsBased on scientific method

Normative EconomicsUses value judgments and opinionsUsed to find the “best option”

Positive Economics

Normative Economics

7 Principles of Economics

1. PEOPLE CHOOSEScarcity forces people to choose 1

option over anotherEx: Sleep or get to school on time

2. PEOPLE’S CHOICES INVOLVE COST

Every choice has a cost and benefitEx: Sleep in = more rest, but

potential punishment OR No sleep = no punishment

7 Principles Continued3. LIFE IS LIVED ON A MARGIN

Each additional item added has a marginal cost and a marginal gain – is one more worth it?

Ex: The GUM CHALLENGE

4. PEOPLE RESPOND TO INCENTIVES IN PREDICTABLE WAYS Incentives always change people’s decisions Ex: Sales – If two products are available and

one is on sale while the other isn’t, people may choose the cheaper one even if it’s a lesser quality

7 Principles Continued5. PEOPLE GAIN WHEN THEY TRADE

VOLUNTARILY You can’t do everything – you trade

6. MARKETS COORDINATE TRADE Markets bring people together perfectly

without intervention

7. PEOPLE’S CHOICES HAVE CONSEQUENCES IN THE FUTURE

A choice today affects you and others later Ex: Going to lunch may mean you don’t

have enough money for the concert this weekend.

EXIT SLIP 3-2-1

LIST THREE WAYS YOU USE ECONOMICS IN YOUR DAILY LIFE

DEFINE THE TWO FIELDS OF ECONOMICS

WRITE ONE NEWSPAPER HEADLINE WHICH ILLUSTRATES POSITIVE ECONOMICS