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ECONOMICS CH. ONE: WHAT IS ECONOMICS? 1. VOLUNTARY EXCHANGE  IMAGINARY DIALOGUE BETWEEN PRODUCER AND CONSUMER WHERE $ IS EXCHANGED FOR G/S  IT IS RESPONSIBLE.

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Presentation on theme: "ECONOMICS CH. ONE: WHAT IS ECONOMICS? 1. VOLUNTARY EXCHANGE  IMAGINARY DIALOGUE BETWEEN PRODUCER AND CONSUMER WHERE $ IS EXCHANGED FOR G/S  IT IS RESPONSIBLE."— Presentation transcript:

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2 ECONOMICS CH. ONE: WHAT IS ECONOMICS?

3 1. VOLUNTARY EXCHANGE  IMAGINARY DIALOGUE BETWEEN PRODUCER AND CONSUMER WHERE $ IS EXCHANGED FOR G/S  IT IS RESPONSIBLE FOR ORGANIZING HOW G/S WILL BE PRODUCED & DISTRIBUTED  Here’s what it would look like if it wasn’t imaginary…

4 LET’S TAKE A LOOK AT NUTTY CHOCOLATE BARS… (Ch. 1: Nutty Bar Wksht.)

5 2. WHERE DO MARKETS EXIST?  ANYWHERE THAT VOLUNTARY EXCHANGE TAKES PLACE

6 3. DEFINE GOODS/SERVICES  GOODS: ANYTHING THAT YOU CAN SEE OR TOUCH (TANGIBLE) ~ PIZZA, REFRIGERATOR, GAS  SERVICES: ANYTHING THAT YOU CAN NOT SEE OR TOUCH (INTANGIBLE) ~ PIZZA DELIVERY,REFRIGERATOR REPAIR SERVICE, FULL-SERVICE GAS STATION

7 4. SCARCITY  NOT ENOUGH RESOURCES TO SATISFY EVERYONE’S WANTS AND NEEDS

8 5. 4 PRODUCTIVE RESOURCES  NATURAL: TREE, SUNLIGHT, WATER  HUMAN: MANUAL, MENTAL LABOR  CAPITAL: ANY G/S USED IN THE PRODUCTION/DISTRIBUTION OF ANOTHER G/S (TRUCK, COMPUTER, MACHINE PRESS)  ENTREPRENEURSHIP: A RISKTAKER WHO CREATES A NEW G/S OR EXPANDS ON AN EXISTING ONE (BILL GATES, DONALD TRUMP, JAY-Z)  TRY AND THINK OF A G/S THAT DOESN’T USE ALL 4 IN IT’S PRODUCTION AND/OR DISTRIBUTION PROCESS (EXTRA CREDIT IF U CAN)

9 LET’S TRY SOME KELLOGGS CORN FLAKES (ESL p. 4)

10 6. ECONOMICS  THE STUDY OF PRODUCERS AND CONSUMERS ENGAGING IN VOLUNTARY EXCHANGE IN MARKETS WHERE $ IS EXCHANGED FOR G/S THAT ARE MADE FROM SCARCE RESOURCES

11 7. OPPORTUNITY COST  THE NEXT BEST THING YOU COULD DO/BUY INSTEAD OF WHAT YOU CHOSE TO DO/BUY  EX.: IF I HAD $5.00 AND CHOSE TO BUY McDONALD’S INSTEAD OF TACO BELL, THAN TACO BELL BECOMES THE OPPORTUNITY COST OF BUYING McDONALD’S

12 7. OPPORTUNITY COSTS  MORE EXAMPLES:  IF I HAD $ AND BOUGHT A PAIR OF TIMBERLANDS INSTEAD OF A PAIR OF NIKE, THAN THE NIKE PAIR HAVE BECOME MY OPPORTUNITY COST FOR BUYING THE PAIR OF TIMBERLANDS

13 ESL p. 6 (question #6)  Microwave Ovens -500,000 = equipment -200,000 = production costs/year -700,000 = deficit +225,000 = projected annual sales -475,000 = deficit after year 1 sales +25,000 profit/year (225,000 – 200,000) * it will take 19 years to break even; 20 years to make a profit ($25,000.00)  U.S. Treasury Bonds -500,000 = investment +50,000 = interest check government will pay at end of year ,000 = deficit at end of year 1 +50,000 = interest payments each year * it will take 9 years to break even; 10 years to make a profit ($50,000.00)

14 8. TRADE OFF DECISION DOING/BUYING A LITTLE LESS OF ONE THING SO YOU COULD DO/BUY A LITTLE MORE OF SOMETHING ELSE.

15 EXAMPLE:  WALKING THRU THE FOOD COURT AT GREAT LAKES MALL WITH $7.00  WANTING TO BUY 2 GORDITAS, AND A 7- LAYER BURRITO AND A PEPSI FOR AROUND $6.00  ALSO WANTING TO BUY 2 CHICK FIL-A SANDWICHES, AN ORDER OF LARGE WAFFLE FRIES AND A COKE FOR AROUND $6.00  T.O.: BUYING 1 GORDITA, 1 BEAN BURRITO, 1 CHICK FIL-A SANDWICH AND A COKE FOR AROUND $7.00

16 EXAMPLE: WWALKING INTO FYE AT GREAT LAKES MALL WITH $25.00 WWANTING TO BUY THE NEW YOUNG JEEZY CD “HOLLA AT YA” FOR $19.99 AALSO WANTING TO BUY KANYE WEST’S NEW CD “SHAMA LAMA DING DONG” FOR $15.99 TT.O.: BUYING AN ILLEGAL ‘BURNT’ CD FOR EACH AT $10.00 A POP

17 LAST EXAMPLE:  WALKING INTO CVS WITH $10.00  WANTING TO BUY A BOTTLE OF TUMS FOR $6.99  ALSO WANTING TO BUY A LARGE BOTTLE OF EX-LAX FOR $8.99  T.O.:BUYING A ROLL OF TUMS FOR $.89 AND THEN BUYING A SMALL BOTTLE OF EX-LAX FOR $4.99

18 HEY HONEY! WHERE’S THE DAMN TOILET PAPER? We’re out! I told you to get some on your way home from work Ahhh crap! That’s just great! Looks like this Reader’s Digest will have to do

19 9How does a smart consumer/producer know when to stop doing/buying one thing and start doing/buying the other thing when making a trade-off decision 9. How does a smart consumer/producer know when to stop doing/buying one thing and start doing/buying the other thing when making a trade-off decision  When the cost of doing/buying the first thing starts to outweigh its benefits  COST – BENEFIT ANALYSIS  Ex.: I don’t have much time to get ready in the morning and if I am done pooping and continue to sit on the toilet, that’s not good cost-benefit analysis.

20 LET’S GO OVER ESL pp

21 10. Define Production-Possibility Curve 11. What type of decision does it illustrate?  A curve/graph illustrating the maximum production possibility combinations between doing/buying 2 things  It illustrates a Trade-off Decision

22 LET’S GO OVER ESL p. 7

23 Example: a PPC of a trade-off between building highways or aircraft carriers H 900 I G 600 H W 300 A Y AIR CRAFT CARRIERS

24 Example: a PPC of a trade-off decision between studying 4 Economics &Geometry (120 minutes total) G E

25  Ilene Dover is an industrial Tech. teacher at Richmond Hts. High School. She is struggling to find the right combination of ‘project time’ vs. ‘clean-up time’ for her students. Help her make a PPC for her 60 min. class. Make 3 combinations

26 Example: a PPC of a trade-off between minutes spent ‘working on project’ & ‘room clean-up P 60 R O 40 J E 20 C T ROOM CLEAN-UP

27 Example: a PPC of a trade-off decision between producing an Arion 35Z PC and an Arion 35X Laptop ($500,000.00) A A 10035Z Arion35X Laptop 100 x $5, = $500, This means that they can not make any laptops (0) 75 x $5, = $375, $500, $375, = $125, (12.5 x $10,000.) 25 x $5, = $125, $500, $125, = $375, (37.5 x $10,000.) 50 x $10, = $500, This means that they can not make any Arion 35Z’s(0)

28 Example: a PPC of a trade-off decision between studying 4 Economics &Geometry (120 minutes total) E G

29 12. How does ‘Voluntary Exchange’ answers the 3 questions all econ. Systems strive to answer?  What g/s will we produce?  Those g/s that consumers want  How will we produce them?  Producers will make them as efficiently as possible (high quality/low price)  Who will receive them once they are done?  Whoever can afford them

30 LET’S BEGIN CH. 1: PPC WKSHT.


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