UNIT IIUNIT II

Economic Economic ResourcesResources

(Assignment #1)(Assignment #1)

WARM UPWARM UP

Make a list of 5 Make a list of 5 things you really things you really

want!!!want!!!(Assignment #1)(Assignment #1)

ScarcityScarcityThe Economic The Economic

ProblemProblem

SCARCITYSCARCITY

LimitedResources

SCARCITYSCARCITY

Unlimited Wants

Economics Is…Economics Is…

The study of limited The study of limited resources but resources but

unlimited wants, unlimited wants, which forces people which forces people to make a CHOICE!to make a CHOICE!

Opportunity CostOpportunity Cost

What does it cost you to What does it cost you to “attend” this particular “attend” this particular “class session”?“class session”?

Think about it!Talk to your partner.

Opportunity CostOpportunity Cost

To answer the question, you To answer the question, you should have asked yourself what should have asked yourself what else you could be doing during else you could be doing during this time?this time?

Make a list…Make a list… Next, prioritize your other Next, prioritize your other

activities.activities.

Opportunity CostOpportunity Cost

The first item on your list The first item on your list of alternative activities is of alternative activities is the the opportunity costopportunity cost of of attending this class.attending this class.

Every activity has a cost - Every activity has a cost - what you gave up.what you gave up.

Opportunity CostOpportunity CostBecause resources are Because resources are scarcescarce, ,

choices need to be made.choices need to be made.Choice results in cost.Choice results in cost.The cost of any choice is what The cost of any choice is what

you had to give up.you had to give up.This is called This is called Opportunity CostOpportunity Cost..

Economics:Economics:TWO BRANCHESTWO BRANCHES

MicroeconomicsMicroeconomicsMMacroeconomicsacroeconomics

“Small Picture” “Big Picture”

Study of individual Study of the economy units. as a whole.

Looking at one thing Concerned with the at a time TOTAL picture

Individual decision making Societal decision making

Micro or MacroMicro or Macro

Write down the subject of newspaper Write down the subject of newspaper headlines you did for your current headlines you did for your current events and determine whether each events and determine whether each is a micro or macro issue!!!is a micro or macro issue!!!

Then, discuss with your partner – are Then, discuss with your partner – are they correct??they correct??

Economics…Economics…

Uses Uses resourcesresources to achieve wealth to achieve wealth

Types of ResourcesTypes of Resources

Goods v. ServicesGoods v. Services

– GoodGood -- An item you can see, feel, and -- An item you can see, feel, and touch and that requires scarce resources to touch and that requires scarce resources to produce and satisfies human wantsproduce and satisfies human wants

– Services Services -- Something that is not physical -- Something that is not physical that requires scarce resources to produce that requires scarce resources to produce and satisfies human wantsand satisfies human wants

=>With your partner list 3 Goods & 3 =>With your partner list 3 Goods & 3 Services…Services…

Four Factors of ProductionFour Factors of Production(Resources used to achieve wealth)(Resources used to achieve wealth)

LandLand-natural resources-natural resources LaborLabor-an individual providing his/her -an individual providing his/her

services for wagesservices for wages CapitalCapital-equipment that can be used -equipment that can be used

for productionfor production EntrepreneurshipEntrepreneurship-someone that -someone that

uses the first three resources to uses the first three resources to make a profit. Considered to be a make a profit. Considered to be a “risk taker” and business leader.“risk taker” and business leader.

Draw a Tree MapDraw a Tree Map

Four Factors of Production

LAND CAPITAL EntrepreneurshipEntrepreneurshipLABOR

Determine which of the four factors of Determine which of the four factors of production it falls under and place it in production it falls under and place it in

the correct place on your tree map:the correct place on your tree map: ComputerComputer ForestsForests Cab driverCab driver Bakery Store OwnerBakery Store Owner PetroleumPetroleum AutomobileAutomobile Brain surgeonBrain surgeon FactoriesFactories TractorTractor Highway systemHighway system

RadioRadio MountainsMountains Small restaurant Small restaurant

ownerowner MineralsMinerals PencilPencil Computer software Computer software

developerdeveloper WaitressWaitress OceanOcean FishFish

Come Up With 3 Examples of Your Come Up With 3 Examples of Your Own and add it to your tree mapOwn and add it to your tree map

Land:Land:

Labor:Labor:

Capital:Capital:

Entrepreneur:Entrepreneur:

Tree Map Collage of the Four Factors of Tree Map Collage of the Four Factors of Production Production

Create a collage that illustrates the four Create a collage that illustrates the four factors of production.factors of production.

Draw another tree map on your Draw another tree map on your construction paper and label each construction paper and label each “branch” as one of the four factors of “branch” as one of the four factors of production. production.

Find pictures in the magazines that fall Find pictures in the magazines that fall under each category.under each category.

QUICK QUIZ: QUICK QUIZ: (Match the correct term with its (Match the correct term with its

definition)definition)1.1. ScarcityScarcity

2.2. EntrepreneurEntrepreneur

3.3. GoodGood

4.4. LaborLabor

5.5. EconomicsEconomics

a.) a.) The study of how people use their The study of how people use their scarce resources to satisfy their scarce resources to satisfy their unlimited wants.unlimited wants.

b.) All physical and mental effort b.) All physical and mental effort used to produce goods and servicesused to produce goods and services

c.) A profit seeker who develops a c.) A profit seeker who develops a new product and assumes the risk new product and assumes the risk of profit or lossof profit or loss

d.) Limited resources but unlimited d.) Limited resources but unlimited wantswants

e.) An item you can see, feel, and e.) An item you can see, feel, and touch and that requires scarce touch and that requires scarce resources to produce and satisfies resources to produce and satisfies human wantshuman wants

Due to Due to ScarcityScarcity, every Society Must , every Society Must Answer 3 Questions:Answer 3 Questions:

1.1. What goods shall we produce?What goods shall we produce?

2.2. How shall these goods be How shall these goods be produced?produced?

3.3. For whom should the goods be For whom should the goods be produced?produced?

*These are known as the 3 Economic *These are known as the 3 Economic Questions*Questions*

In the U.S. private enterpriseIn the U.S. private enterprise must must answer the three Qs as follows:answer the three Qs as follows:

1.1. WHAT TO PRODUCE?WHAT TO PRODUCE? U.S. production leans towards U.S. production leans towards consumer goods & servicesconsumer goods & services

2.2. HOW TO PRODUCE?HOW TO PRODUCE? U.S. believes in private enterprise U.S. believes in private enterprise (corporations and small businesses (corporations and small businesses privately owned)privately owned)

3.3. FOR WHOM TO PRODUCE?FOR WHOM TO PRODUCE? U.S. production leans towards U.S. production leans towards the large middle classthe large middle class

Survival ActivitySurvival Activity

Read the PromptRead the Prompt Answer the Three Economic Answer the Three Economic

Questions using the resources Questions using the resources provided on the handout with your provided on the handout with your partnerpartner

Write 1 paragraph for each questionWrite 1 paragraph for each question

Wrap-upWrap-up

Why does scarcity exist and what does it Why does scarcity exist and what does it force us to do?force us to do?

List the different types of resources and List the different types of resources and factors of production we discussed today factors of production we discussed today and explain what they help us do.and explain what they help us do.

List the three economic questions and List the three economic questions and explain why private enterprise must ask explain why private enterprise must ask ourselves the three questions in the U.S. ourselves the three questions in the U.S. to make economic decisions.to make economic decisions.