Our necessities are few but are wants are endless. INSCRIPTION ON A FORTUNE COOKIE Class Activity on Incentives

What is Economics?  Economics: the study of how people seek to satisfy their needs and wants by making choices

What is Economics?  Economic Trilogy: 1. Scarcity 2. Choice 3. Cost

Needs vs. Wants: Look at these pictures. pictures  Necessary for survival  Ex: Air, Food, Shelter Something desirable but not necessary Ex: Xbox 360, Prom Dress, Bentley Need: Want:

Scarcity  Physical objects  Ex: Shoes, Iron, Bananas Goods:Services: Actions or activities a person performs Ex: Perform Surgery, Mow the Lawn, Hammer Nails

Scarcity (cont)  there are limited quantities of resources to meet unlimited wants.  Note: scarcity does not mean that there is not a lot of that type of resource… It only means there is a limit.  Note: ALL resources are limited.

Scarcity vs. Shortage  Shortage:  A situation in which a good or service is unavailable or only available in less than normal amounts.

Factors of Production 1. Land: A. Refers to all natural resources B. Examples -Actual Land -Water -Coal

MASTER these Definitions  Opportunity Costs- the VALUE of the best alternative given up when a choice is made  Scarcity-wants for goods/services exceed the quantity (amount) of goods/services that can be produced using all available resources  Tradeoff-giving up some of one thing to get more of something else

Factors of Production 2. Labor A. Effort devoted to a task for which a person is usually paid B. Examples -Putting Wheels on Car -Cleaning Teeth -Teaching

Factors of Production 3. Capital: A. Human made resources used to produce other goods and services B. Two kinds: -Physical Capital -Human Capital

Capital  Physical Capital (a.k.a. – capital goods)  Human made objects used to create other goods and services  Ex:  Buildings  Tools  Spool of Thread

Capital  Human Capital:  The knowledge and skills a worker gains through education and experience  Examples of how you get this:  School  Training  Your own Experiences

Factors of Production 4. Entrepreneurs A. Someone who combines land, labor and capital to create and market goods and services. B. Ex: -Bill Gates/ Mark Zuckerberg -Owner of a yard service (Cute old man with pipe)

Land All of the natural resources that are used to produce goods and services Labor Any effort a person devotes to a task for which that person is paid Capital Any human made resources that is used to create other goods and services Entrepreneur Goods and Services The Factors of Production

What’s the point? 1. People respond predictably to positive and negative incentives. 2. Because of interdependence, a decision made by one party has intended and unintended consequences on others. 3. Scarcity of all resources forces people to make choices. These choices come with a cost.

What is the difference between a need and a want? A.) A need is necessary for survival. A want is desirable but not necessary B.) A want is necessary for survival. A need is desirable but not necessary C.) A cell phone is a need D.) A shelter is a want

Define scarcity. A.) there are unlimited quantities of resources to meet limited wants B.) there are limited quantities of resources to meet unlimited wants C.) there are unlimited quantities of resources that are used to meet unlimited wants.

List the 4 factors of production. A.) goods, services, labor, land B.) physical objects, business, money, land C.) physical capital, human capital, capital goods, capital service

Describe the 2 types of capital. A.) physical capital (capital goods) B.) human capital C.) both a and b

What is an entrepreneur? A.) someone who works for a big corporation B.) someone who combines land, labor and capital to create and market goods and sevices C.) someone who works for the government

Review  WantsQuiz.html WantsQuiz.html 

Scarcity Review Video

Factors of Production Review

QUESTIONS???