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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.

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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:

1 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 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).

2 Elmo was sold for as much as $2500 through a classified ad

3 Elmo Videos Elmo Commercial Elmo Good Morning America

4 Fundamental Economic Concepts Scarcity and the Factors of Production
Scarcity - fundamental problem facing all people; unlimited wants and limited resources to satisfy those wants The Basic Economic Problem: Humans' wants and needs are infinite, while the resources needed to satisfy those wants and needs are limited and scarce.

5 Scarcity What makes something scarce?
Something is scarce when it is both limited and desirable e.g. - Lebron James, oil, time, rest, grass in the winter (north) etc. Scarcity applies to everyone Scarcity represents permanent problems that cannot be solved

6 How to allocate (distribute) scarce resources Who gets scarce stuff?

7 Application Question List three things that you feel are scarce in your life, what has caused them to become scarce?

8 How to Login Username: PIN #
Password: Birthday or password used for login

9 How to access My Quizzes
Go to Google Type in Glynn Academy Landinguin Go to My Quizzes Enter your first and last name (password is your pin) Complete Short Answers, pgs. 2-6

10 What is Economics? Economics – the study of choices; how individuals and groups seek to satisfy their wants and needs in light of scarcity

11 What are the Scarce Resources? Factors of Production
Factors of Production - resources required to produce goods and services

12 Land Land – natural resources not created by human effort that are used to produce goods and services The "gifts of nature". Examples: Forests, fish, oil, gas, cattle, etc...

13 Labor Labor – 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...

14 Capital Physical Capital – also known as Capital Goods, human made objects used to create other goods and services Examples: Machines, phones, computers, equipment Human Capital – skills, abilities, and specialized talents of people Examples: College, training, technical school, etc. Financial Capital – money, used by businesses to invest in their business Examples: money

15 Entrepreneurs Entrepreneurs – ambitious business people who organize the factors of production to create new goods and services Entrepreneurs are the "risk takers" who produce a good or service that they believe will succeed in the marketplace.

16

17 Factors of Production Land Capital Labor Entrepreneur + + + =

18 Factors of Production

19 Scarcity Videos Water Scarcity Water Scarcity Part 2 Scarcity Video

20 Classify 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.

21 Classify 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 _________________________________ Entrepreneur Physical Capital Physical Capital Physical Capital Labor Human Capital Land Physical Capital Land Physical Capital Physical Capital Labor Physical Capital

22 Examples of Factors of Production
Land Labor Capital Entrepreneurs 1. 2. 3.

23 Needs 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 need e.g. – cheeseburger, Abercrombie and Fitch, University of Georgia, etc… OR

24 Good – physical, tangible(touchable) product
Goods Good – physical, tangible(touchable) product i.e. – Automobiles, Video Games, Cell Phones, CD’s, Tickle Me Elmo, etc…

25 Services Service – a non-tangible action or activity that is performed for someone else i.e – Financial Advisor, Stock Broker, Movies, Dentist, Teachers, etc..

26 Show 4/5Commercials for following Chart

27 Goods and Services Chart
Item advertised Good/Service Want/Need Market

28 Daily 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

29 What you would have done if you didn’t come to school
Activator Directions: 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. Choice Three Alternatives What you would have done if you didn’t come to school Coming to Economics Class 1. 2. 3.

30 Tradeoffs Trade-off – alternatives that we give up whenever we choose one course of action over another We 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

31 Sleeping (Opportunity Cost)
Opportunity Cost – used by economists to measure the cost of decision-making; the value of the what we give up Next best alternative use of money, time, or resources Sleeping (Opportunity Cost) Coming to Economics

32 Today’s Assignments Short Answer Opportunity Cost and the PPF pgs. 8-18 Scarcity Article and Questions, found under “online assignments” link

33

34 Trade-Offs Individuals and Trade-Offs – studying one subject vs. another, watching TV or working out, etc. Business Trade-Offs – producing iPod vs. iPhone Society and Trade-Offs – “guns or butter”, military or consumer goods

35 Decision-Making Grid or Criteria Yes No Yes No No Yes Yes Yes No Yes
Alternatives Criteria Immediate Satisfaction Long Term Benefits Entertaining Immediate Financial Benefits Necessary for Long-term success 90 minutes of Sleep 90 minutes of Economics Yes No Yes No No Yes Yes Yes No Yes

36 Decision-Making Grid or Criteria Sleep Economics Yes No Yes No No Yes
Alternatives Criteria Immediate Satisfaction Long Term Benefits Entertaining Immediate Financial Benefits Necessary for Long-term success Sleep Economics Yes No Yes No No Yes Yes Yes No Yes

37 Thinking at the Margin 6:15 6:30 15 6:45 - - - - - - 15 15 Hour Sleep
Planning 6:15 6:30 6:45 15 - - - - - - 15 15

38 Thinking at the Margin Margin – an increment (small unit), a border/edge Thinking at the margin – analyzing the costs and benefits of incremental (small) decisions

39 Thinking at the Margin 40 $9.00 41 13.50 42 43 40 hours of play
Pay Opportunity Cost 40 41 42 43 $9.00 13.50 40 hours of play 1 hour playing video games 1 hour with family 1 studying economics

40 Thinking at the Margin 1 10 2 9 3 8 4 4 5 2 6 7 -2 8 -10 Slice
Marginal Benefit 1 2 3 4 5 6 7 8 10 9 8 4 2 -2 -10

41

42 Factors of Production Land Capital Labor Entrepreneur + + + =

43 Production 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 a Round 1: Make only links Round 2: Make only smiles Round 3: Make half smiles and half links Round 4 (fired worker 1 paper): Make half smiles and half links Round 5 (rehired 4 pieces of paper plus extra scissors: Make half smiles and half links Land Links Smiles Physical Capital Laborers

44 Production Possibilities Frontier Activity
Round Links Smiles

45 Production 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 available What does it show? That nothing is free and that everything has an opportunity cost If society wants more of one thing then it must give up something in return Used to visually represent opportunity cost

46 Basics of the production possibilities frontier model
Unattainable/Economic Growth A 1,000 E Frontier /Efficiency B Underutilization /Inefficiency D C

47 Production Possibilities Model
Quantity of Computers Produced What basic economic concepts can it be used to model? Scarcity Tradeoffs Opportunity cost Economic growth Efficiency Unemployment F Production Possibilities Frontier 1,000 3,000 A 2,200 B 2,000 600 700 1,000 300 E Quantity of Cars Produced

48 Production 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

49 Underutilization (Inefficiency)
Underutilization – using fewer resources than an economy/business is capable of; inefficient use of resources Points inside the curve, d (inefficient use of resources) Underutilization /Inefficiency

50 Growth Growth (future technology) – the change in ability to produce, reflects a change in the curve; Currently unattainable level of production New frontier (usually as a result of new technology) Growth

51 Shifts in the PPF Increase in available resources
Decrease in available resources

52 PPC Activity Good A Good B 12 1 10 2 8 3 6 4 5 Good B Good A 12 10 8 6
12 1 10 2 8 3 6 4 5 Good B Good A Answer 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.

53 Review - 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

54 PPF Exercise A 200 B 180 160 140 80 C 120 100 25 55 40 80 D 80 60 40 20 E Along the curve (frontier) Inside the curve Outside the curve

55 PPF Exercise True False

56 Today’s Assignments Group Work – PPF, #’s 5 – 8
Individual Work – Study Guide and Terms

57 Today’s Assignments What is Economics? Open Notes Quiz (Ch.1)
Production Possibilities Curve Open-Notes Quiz

58 Shoes A 40 35 B 30 25 C 20 15 D 10 5 E CD Players

59 What 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? ________________________________________

60 What 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? ___________________________________________________________________________

61 The 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.

62

63

64 Today’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

65 321 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

66 Essential 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, oil Labor –human resources, workers Capital – machines, computers/robots Entrepreneurs – business owner, Bill Gates

67 Essential Question 3, 4 + 5 Why 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 else The cost of the next best use of time money or resources Thinking about small decisions and the marginal costs and marginal benefits of those decisions.

68 Essential 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 unattainable a

69 Opportunity Cost

70 Chapter 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 scarcity Need – necessity for life, want – expresses a need, not a necessity Good – tangible (pencil), Service – nontangible (doctors appointment) Produce goods and services Land – tree, Labor – teacher, Capital – machines, entrepreneur – Oprah Physical – Capital Good (projector), Human – education, skills, training Give up something to get something else Opportunity Always give up something to get something else Understand the cost and benefit of decision-making Business Social Individual

71 Chapter 1 Study Guide Decision-making grid
A visual illustration of two goods Increases 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 butter b. 5 c. 15 d. 3 e. 10 f. Underutilization, unattainable/future growth a. no b. Outside the curve c pounds of fish d. 20 fish e. increasing opportunity costs f. Bowed outward

72 The 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 -command Why 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."

73 Extra Credit Draw 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.

74 Due Today 8-16 Scavenger Hunt PPF Activity (Links and Smiles)
PPF Practice 1 PPF Practice 3 Study Guide Ch 1 Terms Ch. 1 Notes Chapter 1 Daily Tens (5) Essential Questions (5)

75 Include on Test Name Date (8-16) Block 2
Test – Basic Economic Concepts ID: A, B or C

76 Fundamental 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.

77 Extra 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?

78 Chapter 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 scarcity Need – necessity for life, want – expresses a need, not a necessity Good – tangible (pencil), Service – nontangible (doctors appointment) Produce goods and services Land – tree, Labor – teacher, Capital – machines, entrepreneur – Oprah Physical – Capital Good (projector), Human – education, skills, training Give up something to get something else Opportunity Always give up something to get something else Understand the cost and benefit of decision-making Business Social Individual

79 Chapter 1 Study Guide Decision-making grid
A visual illustration of two goods Increases 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 butter b. 5 c. 15 d. 3 e. 10 f. Underutilization, unattainable/future growth a. no b. Outside the curve c pounds of fish d. 20 fish e. increasing opportunity costs f. Bowed outward

80 Section 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 Jewels Water

81 Consumer – person that uses goods/services in order to satisfy wants and needs.

82 Consumer Good – intended for final use by the individual.
Personal Computer Writing Utensil

83 Conspicuous Consumption – the use of good/services to impress others.

84 Durable Good – any good that lasts three years or more when used regularly.
Television Recording Equipment

85 Nondurable Good – an item that lasts less than three years when used regularly
Paper Food

86 Economic Growth A 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.

87 Wealth The total accumulation of a nation’s goods (stuff).
Buildings, highways, homes, cars, etc.

88 Production Possibilities Frontier – PPF Figure 2.1
A through F are attainable I represents inefficient use of resources U represents unattainable combinations

89 Constant vs. Increasing Costs
Work 4 3 2 1 30 29 25 15 Play

90 The Desk Dilemma Reflection 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?

91 The Desk Dilemma Solution
Team Solution Votes The Economists First Homework Assignment Team Fancy Barter System 2 Team Terrors Highest grade, academic requirements 3 Bag of Money Desks in return for academic goods Team Cash Out Homeless 5 Money Bags Homeless Money Makers 1 dollar, take notes on their desk Team Get Money Shelter 7

92 The Desk Dilemma Solution
Team Solution Votes Trappanomics Rob Them NAZA Take turns, social welfare Fortune Fundraiser to buy new desks Team Watch Out Keep 2, rent 2 The Cash Hustlers Donations, to raise money and buy desks for have-nots Self-Made Auction system Team Monopoly Rent to use top of desks Twerk Team Rent out desks, higher rent for whole desks, lesser rent tops, buy more capital Prestige Worldwide Fundraiser for new desks

93 The Desk Dilemma Solution
Team Solution Votes Med Econartists

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?


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