Presentation on theme: "Activator During the holiday season of 1996, a children's toy appeared on Good Morning America. The toy, produced by Mattel, had sat on the shelves with."— Presentation transcript:
1ActivatorDuring the holiday season of 1996, a children's toy appeared on Good Morning America. The toy, produced by Mattel, had sat on the shelves with very little sales until it appeared on the show. After the toys appearance, its popularity improved and it became the most sought after product of the holiday season. Unfortunately, Mattel did not anticipate the doll’s popularity, only producing 400,000 units, and were not able provide the product in a timely manner at the store level (over 1,000,000 were in demand).
2Elmo was sold for as much as $2500 through a classified ad
3Elmo VideosElmo CommercialElmo Good Morning America
4Fundamental Economic Concepts Scarcity and the Factors of Production Scarcity - fundamental problem facing all people; unlimited wants and limited resources to satisfy those wantsThe Basic Economic Problem:Humans' wants and needs are infinite, while the resources needed to satisfy those wants and needs are limited and scarce.
5Scarcity What makes something scarce? Something is scarce when it is both limited and desirablee.g. - Lebron James, oil, time, rest, grass in the winter (north) etc.Scarcity applies to everyoneScarcity represents permanent problems that cannot be solved
6How to allocate (distribute) scarce resources Who gets scarce stuff?
7Application QuestionList three things that you feel are scarce in your life, what has caused them to become scarce?
8How to Login Username: PIN # Password: Birthday or password used for login
9How to access My Quizzes Go to GoogleType in Glynn Academy LandinguinGo to My QuizzesEnter your first and last name (password is your pin)Complete Short Answers, pgs. 2-6
10What is Economics?Economics – the study of choices; how individuals and groups seek to satisfy their wants and needs in light of scarcity
11What are the Scarce Resources? Factors of Production Factors of Production - resources required to produce goods and services
12LandLand – natural resources not created by human effort that are used to produce goods and servicesThe "gifts of nature".Examples: Forests, fish, oil, gas, cattle, etc...
13LaborLabor – time and effort that a person devotes to producing goods and services.Labor resources are those provided by the body and minds of men and women.Examples: doctors, teachers, construction workers, etc...
14CapitalPhysical Capital – also known as Capital Goods, human made objects used to create other goods and servicesExamples: Machines, phones, computers, equipmentHuman Capital – skills, abilities, and specialized talents of peopleExamples: College, training, technical school, etc.Financial Capital – money, used by businesses to invest in their businessExamples: money
15EntrepreneursEntrepreneurs – ambitious business people who organize the factors of production to create new goods and servicesEntrepreneurs are the "risk takers" who produce a good or service that they believe will succeed in the marketplace.
19Scarcity VideosWater ScarcityWater Scarcity Part 2Scarcity Video
20Classify the Factors of Production in the following scenario: You decide to order a pizza to satisfy your wants. First, you picked up the telephone and gave your order to the owner that entered it into her computer. The information came up on the chief baker’s monitor in the kitchen and he assigned it to one of his cooks. The cook cook used his knowledge of mixing dough out of salt, flour, eggs, and milk. The cook finished mixing dough, washed his hands in the sink, and prepared your pizza using tomato sauce, cheese, and sausage. He then placed the pizza in the oven. Within 10 minutes the pizza was cooked and placed in a cardboard box. The delivery person then grabbed your pizza, jumped in the company car, and delivered it to your door.
21Classify the Factors of Production in the following scenario: Owner _________________________________Computer _________________________________Chief baker’s monitor _________________________________Kitchen _________________________________Cooks _________________________________Knowledge of mixing dough _________________________________Salt, flour, eggs, and milk _________________________________Sink _________________________________Tomato sauce, cheese, and sausage _________________________________Oven _________________________________Cardboard box _________________________________Delivery person _________________________________Company car _________________________________EntrepreneurPhysical CapitalPhysical CapitalPhysical CapitalLaborHuman CapitalLandPhysical CapitalLandPhysical CapitalPhysical CapitalLaborPhysical Capital
22Examples of Factors of Production LandLaborCapitalEntrepreneurs1.2.3.
23Needs vs. Wants OR Need – a basic requirement for survival e.g. – food, clothing, education, etc…Want – not a basic requirement for survival; a means of expressing a neede.g. – cheeseburger, Abercrombie and Fitch, University of Georgia, etc…OR
27Goods and Services Chart Item advertisedGood/ServiceWant/NeedMarket
28Daily Assignment Chapter 1 Section 1 Why does scarcity apply to everyone?List a good and a service that you have purchased in the past month.What are some things that you have that might be considered wants by other societies? Explain why.Last year, you were trying to make a decision on what kind of car you wanted your parents to buy you for your birthday. You had two choices: 1) 1984, Honda Accord for $2,000, or 2) 2010 fully stocked Infiniti G37 for $52,000. Which one of these would be considered a want, and which one a need and why?“Hank” works two jobs, one in the morning and one at night. At his morning job he sells furniture at a furniture store. At his night job he works as a computer technician. Which one of his jobs creates a good and which provides a service?Microsoft offers all of their employees the opportunity to attend the local university for a higher education, free of charge. What would be the motivation for investing in human capital?Which factor of production is represented by each of the following? (a) an office building, (b) an assembly line worker, (c) a tree used to make paper, (d) unused soil, (e) Oprah Winfrey
29What you would have done if you didn’t come to school ActivatorDirections: On a 3 column chart, label it as shown below. In the second column, list 3 possible alternatives that you could have made other than your choice to come to school. In the third column, list the alternative that you would have desired the most.ChoiceThree AlternativesWhat you would have done if you didn’t come to schoolComing to Economics Class1.2.3.
30TradeoffsTrade-off – alternatives that we give up whenever we choose one course of action over anotherWe always give up something to get something else“There is no such thing as a free lunch.” (TINSTAAFL)Individuals, Businesses and society all face tradeoffs
31Sleeping (Opportunity Cost) Opportunity Cost – used by economists to measure the cost of decision-making; the value of the what we give upNext best alternative use of money, time, or resourcesSleeping (Opportunity Cost)Coming to Economics
32Today’s AssignmentsShort Answer Opportunity Cost and the PPF pgs. 8-18Scarcity Article and Questions, found under “online assignments” link
34Trade-OffsIndividuals and Trade-Offs – studying one subject vs. another, watching TV or working out, etc.Business Trade-Offs – producing iPod vs. iPhoneSociety and Trade-Offs – “guns or butter”, military or consumer goods
35Decision-Making Grid or Criteria Yes No Yes No No Yes Yes Yes No Yes AlternativesCriteriaImmediate SatisfactionLong Term BenefitsEntertainingImmediate Financial BenefitsNecessary for Long-term success90 minutes of Sleep90 minutes of EconomicsYesNoYesNoNoYesYesYesNoYes
36Decision-Making Grid or Criteria Sleep Economics Yes No Yes No No Yes AlternativesCriteriaImmediate SatisfactionLong Term BenefitsEntertainingImmediate Financial BenefitsNecessary for Long-term successSleepEconomicsYesNoYesNoNoYesYesYesNoYes
42Factors of ProductionLandCapitalLaborEntrepreneur+++=
43Production Possibilities Frontier Activity Identify Factors of Production:Paper _____________________________Pencil, scissors, roll of tape ________________________Group members ______________________________You will have 3 5 minute rounds of production:2 sheets folded in pattern aRound 1: Make only linksRound 2: Make only smilesRound 3: Make half smiles and half linksRound 4 (fired worker 1 paper):Make half smiles and half linksRound 5 (rehired 4 pieces of paper plus extrascissors: Make half smiles and half linksLandLinksSmilesPhysical CapitalLaborers
45Production Possibilities Model What is the PPC Model?PPC Model – shows/illustrates the possible combinations of goods and services that can be produced by a single nation, firm or individual given the productive resources availableWhat does it show?That nothing is free and that everything has an opportunity costIf society wants more of one thing then it must give up something in returnUsed to visually represent opportunity cost
46Basics of the production possibilities frontier model Unattainable/Economic GrowthA1,000EFrontier /EfficiencyBUnderutilization /InefficiencyDC
47Production Possibilities Model Quantity ofComputersProducedWhat basic economic concepts can it be used to model?ScarcityTradeoffsOpportunity costEconomic growthEfficiencyUnemploymentFProductionPossibilitiesFrontier1,0003,000A2,200B2,0006007001,000300EQuantity ofCars Produced
48Production Possibilities Curve Efficiency – what one is capable of producing; using resources in such a way as to maximize the production of goods and services *Points along the curve, (a – c) *Efficiency
49Underutilization (Inefficiency) Underutilization – using fewer resources than an economy/business is capable of; inefficient use of resourcesPoints inside the curve, d (inefficient use of resources)Underutilization /Inefficiency
50GrowthGrowth (future technology) – the change in ability to produce, reflects a change in the curve; Currently unattainable level of productionNew frontier (usually as a result of new technology)Growth
51Shifts in the PPF Increase in available resources Decrease in available resources
52PPC Activity Good A Good B 12 1 10 2 8 3 6 4 5 Good B Good A 12 10 8 6 12110283645Good BGood AAnswer the following questions based on the model above:The opportunity cost of increasing production from Good A from zero units to one unit is the loss of __________ unit (s) of Good B.The opportunity cost of increasing production from Good A from one unit to two units is the loss of __________ unit (s) of Good B. The total loss is ____The opportunity cost of increasing production from Good A from zero units to 6 units is the loss of _________ unit (s) of Good B.
53Review - Guns or Butter PPF How many guns can be produced when no butter is produced? ________How much butter can be produced when no guns are produced? _______The opportunity cost of increasing the production of guns from 0 to 40 units is ________ units of butter.What would it say about this society if the production decision was to produce at the (45, 20) point; assuming that it takes 30 units of butter to provide basic foodstuffs to society and 40 units of Guns to protect their society? ___________________________________________________This society cares more about military than providing consumer goods for the people
54PPF ExerciseA200B18016014080C12010025554080D80604020EAlong the curve (frontier)Inside the curveOutside the curve
59What do points Q, R, T and V represent What does an efficient use of resources mean? ____________________________________How much food and computers are being produced at point R?Food ______________Computers ______________If we move from point T to V, how many computers are gained and how much food is lost?Computers gained ___________Food lost ____________What is the term used to describe the cost of increasing one item in order to produce the other item? ________________________________________
60What terms could be used to describe this PPF if production was at the 5, 5 point of the graph? _______________________________________What might have caused the condition in the previous question? __________________________________________Illustrate economic growth by labeling a “z” point on the PPC diagram above.What are some factors that might contribute to economic growth? ___________________________________________________________________________
61The opportunity cost of increasing production of Good A from 0 units to 1 unit is the loss of _______ unit(s) of Good B.The opportunity cost of increasing production of Good A from 1 unit to 2 units is the loss of _______ unit(s) of Good B.The opportunity cost of increasing production of Good A from 2 units to 3 units is the loss of _______ unit(s) of Good B.The opportunity cost of increasing production of Good A from 0 units to 2 units is the loss of _______ unit(s) of Good B.The opportunity cost of increasing production of Good A from 0 units to 3 units is the loss of _______ unit(s) of Good B.The opportunity cost of increasing production of Good B from 11 units to 12 units is the loss of _______ unit(s) of Good A.The opportunity cost of increasing production of Good B from 0 units to 11 units is the loss of _______ unit(s) of Good A.
64Today’s Assignment Production Possibilities Curve Open-Notes Quiz What is Economics? Open Notes Quiz (Ch.1)USA Test Prep – Scarcity, Opportunity Cost and the PPF
65321 Summarizer Write 3 things you learned today. Write 2 ways that this lesson can apply be useful to your life.Write 1 question you still have
66Essential Question 1 + 2 Why is scarcity a permanent condition? What are the four factors of production and an example of each?Scarcity reflects the limited resources of a society, but unlimited wants of it’s members.Land – natural resources, oilLabor –human resources, workersCapital – machines, computers/robotsEntrepreneurs – business owner, Bill Gates
67Essential Question 3, 4 + 5Why does every decision involve a trade-off?What does opportunity cost measure?What does it mean to think at the margin?We always give up something to get something elseThe cost of the next best use of time money or resourcesThinking about small decisions and the marginal costs and marginal benefits of those decisions.
68Essential Question 6 The tradeoff between two goods. What is illustrated by the PPC Model; what 3 production possibilities are shown?The tradeoff between two goods.inefficiency/underutilization, efficiency, currently unattainablea
70Chapter 1 Study Guide Scarcity Scarcity is a permanent condition for all people, “unlimited wants, limited resources”The study of choices; how individuals and groups seek to satisfy their wants and needs in light of scarcityNeed – necessity for life, want – expresses a need, not a necessityGood – tangible (pencil), Service – nontangible (doctors appointment)Produce goods and servicesLand – tree, Labor – teacher, Capital – machines, entrepreneur – OprahPhysical – Capital Good (projector), Human – education, skills, trainingGive up something to get something elseOpportunityAlways give up something to get something elseUnderstand the cost and benefit of decision-makingBusinessSocialIndividual
71Chapter 1 Study Guide Decision-making grid A visual illustration of two goodsIncreases in Land, Labor, Capital (more workers, more resources, better technology)Recession, increased labor laws, lazy workers, etc.a. increase production of guns, takes more workers from butterb. 5c. 15d. 3e. 10f. Underutilization, unattainable/future growtha. nob. Outside the curvec pounds of fishd. 20 fishe. increasing opportunity costsf. Bowed outward
72The Economic Revolution: from “The Worldly Philosophers” Reading discussion questions:How is the struggle against scarcity a struggle for survival of man?Is man by nature a social creature? How does man's nature pose a challenge to his survival? Discuss...Discuss the benefits and dangers of the two ways societies organized economic activities throughout most of human history-tradition-commandWhy was there no need for "economists" throughout most of human history?"It was not at all obvious that with each man out only for his own gain, society could in fact endure. It was by no means clear that all jobs of society - the dirty ones as well as the plush ones - would be done if custom and command no longer ran the world. When society no longer obeyed one man's dictates, who was to say where it would end?"Evaluate the author's claim that the economic revolution was "fundamentally more disturbing by far than the French, the American, or even the Russian Revolution."
73Extra CreditDraw a basic PPF that illustrates a personal opportunity cost.Give an example of a tradeoff that you recently experienced, explain the opportunity cost of the decision.
74Due Today 8-16 Scavenger Hunt PPF Activity (Links and Smiles) PPF Practice 1PPF Practice 3Study Guide Ch 1Terms Ch. 1Notes Chapter 1Daily Tens (5)Essential Questions (5)
75Include on Test Name Date (8-16) Block 2 Test – Basic Economic ConceptsID: A, B or C
76Fundamental Economic Concepts SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments.Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.Define and give examples of productive resources (factors of production) (e.g., land (natural), labor (human), capital (capital goods), entrepreneurship).List a variety of strategies for allocating scarce resources.Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity by making choices. SSEF2 The student will give examples of how rational decision making entails comparing the marginal benefits and the marginal costs of an action.Illustrate by means of a production possibilities curve the trade offs between two options.Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs.
77Extra Credit Which points are attainable and desirable? Which point(s) are attainable but not desirable? Give an example of what could have caused this point on the model.Which point (s) are unattainable; what could allow society to one day reach that point?
78Chapter 1 Study Guide Scarcity Scarcity is a permanent condition for all people, “unlimited wants, limited resources”The study of choices; how individuals and groups seek to satisfy their wants and needs in light of scarcityNeed – necessity for life, want – expresses a need, not a necessityGood – tangible (pencil), Service – nontangible (doctors appointment)Produce goods and servicesLand – tree, Labor – teacher, Capital – machines, entrepreneur – OprahPhysical – Capital Good (projector), Human – education, skills, trainingGive up something to get something elseOpportunityAlways give up something to get something elseUnderstand the cost and benefit of decision-makingBusinessSocialIndividual
79Chapter 1 Study Guide Decision-making grid A visual illustration of two goodsIncreases in Land, Labor, Capital (more workers, more resources, better technology)Recession, increased labor laws, lazy workers, etc.a. increase production of guns, takes more workers from butterb. 5c. 15d. 3e. 10f. Underutilization, unattainable/future growtha. nob. Outside the curvec pounds of fishd. 20 fishe. increasing opportunity costsf. Bowed outward
80Section 2 – Basic Economic Concepts Economic Products – relatively scarce goods and services that have utility to consumers, and as a result command a price.Utility – capacity to be useful to the consumer; a way to measure value.Precious JewelsWater
81Consumer – person that uses goods/services in order to satisfy wants and needs.
82Consumer Good – intended for final use by the individual. Personal ComputerWriting Utensil
83Conspicuous Consumption – the use of good/services to impress others.
84Durable Good – any good that lasts three years or more when used regularly. TelevisionRecording Equipment
85Nondurable Good – an item that lasts less than three years when used regularly PaperFood
86Economic GrowthA Nations total output of goods and services increases over time.Gross Domestic Product - total market value of all the goods and services produced within the borders of a nation during a specified period.
87Wealth The total accumulation of a nation’s goods (stuff). Buildings, highways, homes, cars, etc.
88Production Possibilities Frontier – PPF Figure 2.1 A through F are attainableI represents inefficient use of resourcesU represents unattainable combinations
89Constant vs. Increasing Costs Work432130292515Play
90The Desk DilemmaReflection questions (to be answered with your group, each person should have a record of their group’s responses):How does this reflect real world conditions In our economy?What factors prevent us from having everything that we want?How does the United States cope with scarcity?Why is scarcity a permanent condition in all societies?Why is this problem not just an issue of rich/poor?
91The Desk Dilemma Solution TeamSolutionVotesThe EconomistsFirst Homework AssignmentTeam FancyBarter System2Team TerrorsHighest grade, academic requirements3Bag of MoneyDesks in return for academic goodsTeam Cash OutHomeless5Money BagsHomeless Money Makers1 dollar, take notes on their deskTeam Get MoneyShelter7
92The Desk Dilemma Solution TeamSolutionVotesTrappanomicsRob ThemNAZATake turns, social welfareFortuneFundraiser to buy new desksTeam Watch OutKeep 2, rent 2The Cash HustlersDonations, to raise money and buy desks for have-notsSelf-MadeAuction systemTeam MonopolyRent to use top of desksTwerk TeamRent out desks, higher rent for whole desks, lesser rent tops, buy more capitalPrestige WorldwideFundraiser for new desks
94“The Desk Dilemma”Our classroom represents an economy based on a system of “haves” and “have-nots”.Your teams’ job is to problem solve based on the scenario. Determine how to allocate the scarce resources (seats) in light of the unlimited wants of haves and have-nots. Be prepared to present and support your decisions.Requirements:Each group needs a spokesperson to communicate their plan- Your plan should address the following issues:How do you plan to handle the lack of space? (price system, social welfare, etc.)“Haves” – how are you going to philosophically and practically deal with the “have-nots”? (exclude /include them from society)“Have-nots” – what do you want from the “haves”, what is the solution from your perspective?