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Agenda Review Class Rules Key Terms Article Worksheet Student Videos Production Possibilities Curve Production Possibilities Worksheet HOMEWORK Review.

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Presentation on theme: "Agenda Review Class Rules Key Terms Article Worksheet Student Videos Production Possibilities Curve Production Possibilities Worksheet HOMEWORK Review."— Presentation transcript:

1 Agenda Review Class Rules Key Terms Article Worksheet Student Videos Production Possibilities Curve Production Possibilities Worksheet HOMEWORK Review Powerpoint for next class (online) Read Current Reading Assignment (online)

2 Class Rules Be on time Pay attention Be prepared Dont use cellphones during class Comments You are responsible to monitor your grade You are responsible to seek help ( is best way to contact me)

3 Being Prepared Do the reading Assigned Print and Review the Powerpoint before class

4 Course Overview – Review Powerpoints introduce the concepts Lectures explain the concepts Readings, videos, movies apply the concepts

5 Course Overview – Review Powerpoints introduce the concepts Lectures explain the concepts Readings, videos, movies apply the concepts So if you dont review and print the powerpoints before class, success is not likely

6 Course Overview (cont.) Lectures explain the concepts not enough class time to write down all the information contained in the powerpoints

7 Absences You are responsible for… Getting the material Reviewing the Class Presentations (posted on Facebook) Getting the homework assignment, reading assignment, etc.

8 Absences (continued) Tests… You need will make-up the test at detention when you return. You will receive a ZERO if you have not made arrangements and I return the test. is the best way to make arrangements to take the test. Extra Credit given to the class is everyone attends class on test day.

9 Additional Class Materials Multi-Colored pens (or pen) One inch three ring binder

10 Laptops, kindles, iPads, etc. Yes, you can use them.

11 Module 1 – What is Economics?

12 Economics is the study of human behavior. How people allocate limited resources to produce goods and services to satisfy unlimited needs and wants.

13 Key terms Factors of Production Scarcity vs. shortage Need vs. want Good vs. Service Trade-off vs. Opportunity Cost Entrepreneur

14 Four Factors of Production (resources) 1.Land All Natural resources Example - Oil, Coal, Trees 2.Labor People producing a good or service Example – Auto worker, Lawyer, Teacher 3.Human Capital Training for Labor Example – College Education, Seminars 4.Physical Capital Tools used by labor to make goods and services Example – Computers, Buildings, Factories, desks

15 Definition of Economics….The study of human behavior. How people allocate limited resources* to produce goods and services to satisfy unlimited needs and wants. *The four factors of production are resources that are limited.

16 Scarcity vs. shortage Scarcity is permanent But not necessarily a small amount Example: Ocean water Shortage is temporary But temporary may be days, weeks months or even years

17 Need vs. Want Need = gotta have it Want = nice to have it For each person to decide Cellphone example The study of human behavior. How people allocate limited resources to produce goods and services to satisfy unlimited needs and wants.

18 Good vs. Service Good Tangible Generally produced with physical skills, physical capital Examples….a car, a desk, an airplane Service Intangible Generally produced with knowledge, human capital Examples…Medical services, legal services, education

19 Trade-off vs. Opportunity Cost Trade-off = All the choices given up Opportunity Cost = Most valuable choice (trade-off) given up Examples Your time Cafeteria The study of human behavior. How people allocate limited resources to produce goods and services to satisfy unlimited needs and wants. Because resources are limited, you have to make choices.

20 There is no free lunch. There are always trade-offs.

21 Entrepreneur Uses resources (factors of production) to produce goods and services to satisfy needs and wants

22 Entrepreneur Uses resources (factors of production) to produce goods and services to satisfy needs and wants

23 Entrepreneur Uses resources (factors of production) to produce goods and services to satisfy needs and wants Examples La Salle HS Jack FM Bank ATM Amazon.com

24 Quick Review… 1. What is the difference between a shortage and scarcity? (a) A shortage can be temporary or long-term, but scarcity always exists. (b) A shortage results from rising prices; a scarcity results from falling prices. (c) A shortage is a lack of all goods and services; a scarcity concerns a single item. (d) There is no real difference between a shortage and a scarcity. 2. Which of the following is an example of using physical capital to save time and money? (a) hiring more workers to do a job (b) building extra space in a factory to simplify production (c) switching from oil to coal to make production cheaper (d) lowering workers wages to increase profits

25 Article Search Economic Terms

26 Worksheet Chapter 1, Section 1

27 Student videos BvNxU BvNxU

28 THREE MINUTE BREAK screen-stopwatch/ Be back when time expires or detention awaits you.

29 Production Possibilities Curve Graph showing the trade-offs (i.e. possible production outcomes)

30 Production Possibilities Curve Graph showing the trade-offs (i.e. possible production outcomes). Trade offs is a key concept. More of one good or service, less of the other. Product (good or service) B Product (good or service) A

31 Production Possibilities Curve Why is the production possibilities curve bowed out?

32 Production Possibilities Curve Why is the production possibilities curve bowed out? ANSWER: The Law of Increasing Opportunity Costs

33 Production Possibilities Curve Why is the production possibilities curve bowed out? ANSWER: The Law of Increasing Opportunity Costs As you produce more of one product (Good or Service A), the cost (opportunity cost) increases.

34 Production Possibilities Curve Why is the production possibilities curve bowed out? ANSWER: The Law of Increasing Opportunity Costs As you produce more of one product (Good or Service A), the cost (opportunity cost) increases. WHY you might ask Example

35 Watermelons (millions of tons) Shoes (millions of pairs) Production Possibilities Graph Watermelons (millions of tons) c (14,12) d (18,9) A production possibilities graph shows the cost of producing an item. To produce the first eight million tons of watermelons cost of 1 million pairs of shoes. The Trade Off (the real cost) of producing the first eight million tons of watermelons (to go from 0 to 8) is the one million tons of watermelons that you give up (going from 15 to 14) Point A Point B A B At Point A you can produce 0 watermelons and 15 million pairs of shoes. At Point B you can produce 8 million tons of watermelons and 14 million pairs of shoes.

36 Trade-offs Why would the entrepreneur choose to produce more watermelons? What is the cost of that decision? What is the benefit? Why does Apple choose to produce more iPads? What is the cost of that decision? What is the benefit?

37 Watermelons (millions of tons) Shoes (millions of pairs) Production Possibilities Graph Watermelons (millions of tons) c (14,12) d (18,9) What is the cost to produce the first million pair of shoes?

38 Law of Increasing Costs…Revisited The Law of Increasing Opportunity Costs - As you produce more of one product (Good or Service A), the cost (opportunity cost) increases. The cost of first million shoes cost 200,000 tons of watermelons The cost of the fifteenth million (still one million shoes) cost eight million tons. THE COST INCREASED

39 Law of Increasing Costs…Continued Why is that the case?

40 Law of Increasing Costs…Continued Why is that the case? Because the entrepreneur uses the best shoe making resources (most productive factors of production) for making shoes first…the worst / least productive last. As such, it requires more resources to produce the last ton.

41 Shoes (millions of pairs) Watermelons (millions of tons) Production Possibilities Graph g (5,8) A point of underutilization c (14,12) d (18,9) e (20,5) f (21,0) a (0,15) b (8,14) S Efficiency means using resources in such a way as to maximize the production of goods and services. An economy producing output levels on the production possibilities frontier is operating efficiently. Efficient is on the production possibilities curve. Anywhere on the curve but on the curve.

42 Shoes (millions of pairs) Watermelons (millions of tons) Production Possibilities Graph T Future production Possibilities frontier c (14,12) d (18,9) e (20,5) f (21,0) a (0,15) b (8,14) S Growth If more resources become available, or if technology improves, an economy can increase (more stuff) its level of output and grow. When this happens, the entire production possibilities curve shifts to the right.

43 Guns or Butter Phrase used by economists to describe trade-offs. Military Goods (guns) Consumer Goods (Butter)

44 Worksheet, Production Possibilities Curve

45 Homework Print and Review Powerpoint for next class Two Reading Assignment for next class 1.There's No Such Thing As a Free Lunch Questions to consider (i.e. be able to answer) What is the opportunity cost to Adam of failing to start saving at age 18? What is the opportunity cost to John of saving at age 18? What did he give up? (Hint: there is no single right answer, you have to think What might John have given up?) 2. Pass the Book, Hold the Oil Questions to consider What factor of production is key to Taiwans success? Which factor of production was important.... When Columbus sailed to the new world? During the period of colonization? During the industrial revolution? How does this effect you in 2013?

46 HANDOUTS


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