Presentation on theme: "Introduction to Economics"— Presentation transcript:
1Introduction to Economics Unit 1 NotesIntroduction to Economics
2How is Economics defined by scarcity? Unit One, Lesson OneNotesHow is Economics defined by scarcity?
3What is economics?Economics comes from the idea that people CANNOT always have what they want and what they needSo, ECONOMICS is the study of how people seek to satisfy their needs and wants by making CHOICES
4Scarcity & Choice What is a need? What is a want? Need: something that is necessary for survivalWant: item that is not needed for survivalBecause you can’t get everything you want or need, you must…MAKE CHOICES!!Why must we make choices?Because resources are scarce!!What resources are scarce in our everyday lives?Water, food, oil
5All of the goods and services we produce are scarce. Goods: physical objectsExamples: shoes, shirts, cars, pencils, etc.Services: actions or activities that one person performs for another.Examples: haircuts, tattoos, dental checkups, etc.
6Section 1: Scarcity & Choice Scarce/scarcity: limited resources for unlimited wants (Scarcity always exists).Scarcity is NOT the same as a shortage.Shortage is a temporary (sometimes long-term) lack of goods or services.ECONOMICS IS ALL ABOUT SOLVING THE PROBLEM OF SCARCITY!! HOW DO WE FULFILL WANTS/NEEDS WITH FEW RESOURCES?Video Clip
8Section 1: Scarcity & Choice Why do you think economists say that scarcity always exists?Because our needs and wants are always greater than our resource supply!
9Economics in my LifeOccupations: Pay: Mortgage Calculator:
10Unit One, Lesson Two Notes What are the 3 Factors of Production and why are they important to consider in our economy?
11Factors of ProductionEconomists call all the resources that are used to make all goods and services FACTORS OF PRODUCTIONThe factors of production are land, labor, and capital
12Factors of Production Also called factor resources. They consist of: LandLaborCapital
13Land All natural resources used to produce goods and services. Examples are: land, water, wood, wind, sun, cotton, etc.
14LaborThe effort that a person devotes to a task for which the person is paid.Examples are: medical assistant, assembly line worker…just about any job you can think!
15Capital Physical capital-buildings, tools, etc. Both of these are needed to produce goods and services in our economy!!Physical capital-buildings, tools, etc.Human capital-knowledge and skills a worker gains through education and experience.
16Physical capital example Suppose a family of 6 wash dishes by hand every day for every meal (breakfast, lunch, dinner) – 21 meals per week. It takes 30 minutes per meal for 2 people to wash the dishes. That’s 21 hours per week spent washing dishes.Now, let’s say that the family buys a dishwasher for $400. Now it takes 1 person 15 minutes per meal to clean all the dishes. This takes 5 ¼ hours per week.
18Did his risk pay off?Goal was to create online social network for students- for free.Worked with venture capitalists.One offered $500,000 to work on Facebook full time.That fall, they had over six million members.Six months later, Zuckerberg and his partner got $12.7 million more in funding.Members like, advertisers love.By 2008 had more than 70 million users.Growth=more jobs
20Feel free to use the Internet to find all of the resources! ACTIVITYYou will illustrate the factors of production in the making of fast food French fries. (You cannot imagine how much goes into those tasty things!!)You can choose any GOOD!You can work alone or in pairs (no more than 2).You will create a poster with a diagram or a PowerPoint presentation to share with the rest of the class.Each factor must include a minimum of 3 examples but a total of 15 items.LandLaborCapitol (you can show a combination of human and physical capitol)
21Feel free to use the Internet to find all of the resources! ACTIVITYRefer to the following websites as a guide:
22Factors of Production: Fast Food Fries Feel free to use the Internet to find all of the resources!ACTIVITYYour illustration may look something like this:Both physical and human capitalFrench Fries(ex. field, water)LandLabor (farmers)Capital (tractor )
24Land Soil to help the plants grow Peanut Plants to make the peanuts Farms to harvest peanutsWater to help the plants growAir to help the peanuts dry out
25Labor Farmers harvest the peanut plants. “Shellers” at manufacturing plants remove excess dirt and debris.Peanut butter manufacturers receive the fresh peanuts and begin the process of turning them into peanut butter.Other factory workers who grind, process and package peanut butter.
26Capital The peanut farmers who plant and harvest the peanuts. machines which start by pulling the plants from the ground, breaking away the roots, and shaking out excess soil.When the dried plants are harvested, they are placed in wagons and given additional drying time,Then, they are inspected by the Federal or State Inspection Bureaus for quantity and valuation purposes.The blancher machine removes the outer skins by lightly rubbing the peanuts between two belts.Additives that include salt, sugar, and hydrogenated vegetable oilThe jar to fill the peanut butter up with!
27If there is not enough for everybody, how do you make a choice? Unit One, Lesson ThreeNotesIf there is not enough for everybody, how do you make a choice?
28EntrepreneursIf land, labor, and capital are the essential ingredients for creating all goods and services, who pulls those resources together?The answer: entrepreneursEntrepreneurs are ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services
29ScarcityEconomists say that all goods and services are scare because the land, labor, and capital used to create them are SCARCEThis means that the land, labor, and capital to produce them are SCARCE
30Trade-offsEconomists say that all people, even government, make decisions that involve TRADE-OFFSTRADE OFFS are all the alternatives that we give up whenever we choose one course of action over anotherEVERY decision that is made involves trade-offs
32Trade-offsDecisions that business people make on how to use land, labor, and capital involve trade-offsNormally one decision is more desirable than all the other decisionsDo you wake up early and study or do poorly on the test and get extra sleep?
33Trade-offsEconomists simplify their explanations of the trade-offs countries face by using the example of guns or butterFor example, if a country produces more military goods (guns) they will have less resources to devote to consumer goods (butter)
34Opportunity Cost This leads to opportunity cost Opportunity cost is the most desirable alternative that is GIVEN UP as a result of a decisionEssentially, OPPORTUNITY COST is what you’re willing to SACRIFICE as a result of your decisionBecause of SCARCITY one cannot do both decisions – a CHOICE must be made
35Thinking at the MarginThinking at the margin involves adding or subtracting a unit from the decision that involves opportunity costThis does not allow one to take an all or nothing approachSo, do you wake up 30 minutes early instead of 1 hour to study?This allows more decisions for one person to choose
36Decision-makingThis decision making process is sometimes called COST/BENEFIT ANALYSISAnytime a decision is made economists realize that one has to compare opportunity costs and benefits (what will be sacrificed and what will be gained)This is ECONOMICS