Chapter 1 Economic Decisions And Systems

1-1 Satisfying Needs & Wants Goals: –Explain the difference between needs & wants –Distinguish between goods and services –Describe the types of economic resources

Chapter 1 - Economic Decisions *Needs Vs. Wants Needs - Necessary for survival i.e. food, shelter, clothes Wants - Not necessary for survival - bring comfort i.e. stereo, television, chewing gum *Abraham Maslow’s Hierarchy of Needs Self Actualization Esteem Social Safety Physiological

Maslow’s Hierarchy of Needs PHYSIOLOGICAL OR SURVIVAL NEEDS MOST NEEDS HAVE TO DO WITH SURVIVAL PHYSICALLY AND PSYCHOLOGICALLY

PHYSIOLOGICAL OR SURVIVAL NEEDS SAFETY NEEDS ON THE WHOLE AN INDIVIDUAL CANNOT SATISFY ANY LEVEL UNLESS NEEDS BELOW ARE SATISFIED Maslow’s Hierarchy of Needs

PHYSIOLOGICAL OR SURVIVAL NEEDS SAFETY NEEDS LOVE, AFFECTION, AND BELONGINGNESS NEEDS Maslow’s Hierarchy of Needs

PHYSIOLOGICAL OR SURVIVAL NEEDS SAFETY NEEDS LOVE, AFFECTION, AND BELONGINGNESS NEEDS ESTEEM NEEDS Maslow’s Hierarchy of Needs

SELF-ACTUALIZATION NEEDFOR MASLOW EMPHASIZES NEED FOR SELF ACTUALIZATION IS A HEALTHY INDIVIDUAL’S PRIME MOTIVATION Maslow’s Hierarchy of Needs

SELF- ACTUALIZATION NEED FOR MASLOW EMPHASIZES NEED FOR SELF ACTUALIZATION IS A HEALTHY INDIVIDUAL’S PRIME MOTIVATION SELF-ACTUALIZATION MEANS ACTUALIZING ONE’S POTENTIAL BECOMING ALL ONE IS CAPABLE OF BECOMING

Maslow’s Hierarchy of Needs PHYSIOLOGICAL OR SURVIVAL NEEDS SAFETY NEEDS LOVE, AFFECTION, AND BELONGINGNESS NEEDS ESTEEM NEEDS SELF- ACTUALIZATION NEED

Goods & Services Goods - things you can see and touch = tangible –T-Shirts, football, CDs Services - Efforts provided by people, equipment, or technology –Haircut, movies in a theatre Economic Resources (Factors of Production) - The means through which goods and services are produced (3 types) –Natural Resources - Raw materials supplied by nature Iron ore, gold, water, fish, etc. –Human Resources - People who work to produce goods and services Laborers –Capital Resources - Tools, equipment, buildings that are used to produce goods and services Factories, computers, trucks, etc. Money $ $ $ (needed to run a business)

The Economic Resources  Land resources, also known as natural resources, includes anything in its natural state.

The Economic Resources  Labor, also known as human resources, includes the employees of the business who complete the work.

The Economic Resources  Capital includes the money, tools, buildings, and equipment needed for production of products or services.

The Economic Resources  Entrepreneurship refers to the individual who takes the risk of owning and operating the business. Video: Jerry Jones and the Dallas Cowboys

Key Concepts Assignment –Questions at bottom of page 11 –Technology in Action questions 1 on page 10

Assignment When you are done, research each resource that is scarce…describe the resource, why it is scarce, and statistics related to that resource. –Natural – at least 2 slides w/ pics –Human – at least 2 slides w/ pics –Capital – at least 2 slides w/ pics PowerPoint – AT LEAST 6 slides Include the site you used. Cite your source!

1-2 Economic Choices Goals: –Understand the basic economic problem –Explain the steps in the decision-making process

The Basic Economic Problem SCARCITY - THE BASIC ECONOMIC PROBLEM! PRIORITIZE! Scarcity – not having enough resources to satisfy every need –Forces us to make choices –Implement a budget Economic Decision Making – the process of choosing which wants, among several options, will be satisfied.

THE Basic Economic Problem  Scarcity is created by the difference between our limited resources (money) and our unlimited needs and wants.  Scarcity forces everyone, people, businesses, and nations, to make economic choices. If traveling to a soccer game is too expense, we can watch in on pay-per view with friends.

Choices, choices, choices Trade – 0ff – when you give up something to have something else… Opportunity cost – the value of the next-best alternative that you did not choose. Ex. 1 Ex. 1 –The benefit you get from your choice should be greater than the benefit from the next-best choice. Businesses carefully calculate the opportunity costs of decisions before making a decision about how money will be invested

Decision-Making Process Six Steps –1. Define the Problem What is the central issue? Must be defined in order to make a decision that will lead to a solution –2. Identify Choices How many are there? What is the opportunity cost? –The forgone benefits. What you are giving up by choosing one situation over another. i.e. Movie vs.bowling. Movie wins, bowling is the opportunity cost. –3. Evaluate Choices Look at the advantages and disadvantages of each choice/alternative

Decisions, Decisions, Decisions –4. Choose One The best one for the particular time –5. Act on Your Choice Just do it! –6. Review/Evaluate Your Decision Did you define the problem correctly? Did you look at all the available choices? Did you act at the necessary time?

Decisions, Decisions, Decisions Share a decision with me that you had to make over the weekend. Describe, for each decision step, what happened 1.Define the issue/problem 2.Identify choices. What choices were available to you? 3.Evaluate choices. What were the pros and cons of each option? 4.What did you choose to do (choose one)? 5.Act on it – no explanation needed 6.How did it go (evaluate the decision)?