1. What does the following statement mean. If you don’t know, work it out on your paper. What do you think it means: “There is no such thing as a free lunch.”. Please have your notebook open to Assignment Phocabulary What will we learn today? What will we learn today? Standard 12.1.1 Examine the casual relationship between scarcity and the need for choices. Standard 12.1.2 Explain opportunity cost and the marginal benefit and marginal cost. What is Economics, Day 2 Week: What is Economics - Week 1 Directions: In your Spiral, answer the following question. You need to write a one paragraph response. There should be no talking during the Bellwork. 1

2. Notes taken in this class are Cornell Note style. That means split in half, right half bigger than left. 2

3. Need: Something like air, food, or shelter. Necessary for survival. Want: An item we desire. Cell phone, iPod, video games, fancy meal Economics: study of people, groups (businesses), and governments and the choices they make. 3

4. Goods: Physical objects such as shoes, shirts, etc. Services: Actions that one person performs for another (haircuts, dental checkups) A. Defining Scarcity $ All resources are scarce Scarcity: Limited resources to meet unlimited wants (sooner or later, there is always a limit) 4

5. B. Scarcity vs. Shortage Shortage: A shortage occurs when producers will not or cannot offer goods or services at the current prices. (Wiis run out at Christmas, or food runs out during natural disaster.) Note: shortage: temporary, scarcity: always 5

6. $ Factors of production: The resources that are used to make goods and services. AKA Land, labor, capital. 1. Land: All natural resources used to make goods and services. (land, coal, water, wood, etc) 2. Labor: the effort people devote to a task for which they are paid 6

7. $3. Capital: Any human-made resource that is used to produce other goods and services. Two Types of Capital Physical capital: Human-made objects that create goods or services (buildings, tools, factories). These things make us more productive (dish washer instead of hand-wash) Human capital: The knowledge or skills a worker gains through education and experience. 7

8. Entrepreneurs: Ambitious leader who combines land, labor and capital to create and market new goods and services Corner store or Bill Gates, both are entrepreneurs. 8

9. Checking for Understanding- C4U What is the difference between a need and want? Touch a good? Name a service What is the role of the Entrepreneur?

10. Factors of Production

11. Scarce Resources: Goods are scarce because resources are scarce. We don’t have unlimited t-shirts because there is limited cotton (or workers) 11

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13. 13 French FriesMcDonalds Cheeseburger Levi’s JeansHonda Accord LandLand and water to grow potatoes Farms, water, veggie, Ranches. Land for factory and stores Farms, water for cotton. Ranches, mine LaborPeople who grow potatoes, drive potatoes to fry factory, and factory employees People who work on farms and Ranches. Factory workers, Truck drivers etc.… Workers who sew the jeans. Employees of the factories and Farms, miners. CapitalCars, factory machines to make the fries, etc. Trucks, factories, machines to process. Stores.. Trucks, machines, factories, shipping workers in stores Entrepreneur (type of ownership, how it is marketed) CorporationCorporation, Private own… Corporation

14. Trade Offs: Alternatives that we give up when we make a decision A) Individual Trade-Offs: Work more, play less. Play high school sport, but don’t have a job. B) Businesses Trade Offs: Farmer decides to grow broccoli instead of apples. C) Society Trade Offs: $ Guns or butter If a country decides to produce more military goods (guns), they will have fewer resources to devote to consumer goods ex. health care, education (butter). 14

15. Opportunity cost: The thing you give up as a result of a decision. $ The most desirable alternative given up for the decision Examples: You choose to get married, but you give up your freedom. You choose to fix your car, but now you can’t afford to fix your teeth. You choose to sleep in, now you missed church. You go out instead of doing homework 15

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17. A) Decision Making Grid Decisions are hard. Have you ever made a pro/con list? A decision making grid is similar. See (pg. 10) B) Making the Decision “Choosing is refusing.” When we make any decision, we are giving something up. C. Decision Making APRON activity 17

18. Thinking at the margin means deciding how much more or less to do. Usually we don’t decide to sleep four extra hours and skip studying. Instead we sleep 2 hours and study 2 hours. (see pg. 11) Cost and Benefit at the Margin You have to look at how decisions affect how much you spend and how much you gain. When you sacrifice more than you gain, no more units should be added. 18

19. C4U Name one opportunity cost of not doing your work? What is more important now, guns or butter?

20. STOP HERE

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22. 22 BATMAN ADVANTAG E BATMAN DISADVANTA GE SUPERMAN ADVANTAGE SUPERMAN DISADVANTAGE

23. Economists often use graphs to help show data. Production possibilities curve: This graph shows alternative ways to use an economy’s productive resources. Production possibilities frontier: A line on the graph that shows the maximum possible output Each point on the graph represent a trade off. $ Efficiency: An economy that uses it’s resources in such a way as to maximize the production of goods and services 23

24. Underutilization: Using fewer resources than an economy is capable of using Cost: What we give up when we make a choice. Same as opportunity cost Law of increasing costs: Law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases. (see page 17) 24

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27. Pg. 20, #1 – 12, May do with a Partner, write answers in your Spiral. 27