Economics 1.2 Scarcity, Choices, and Opportunity Costs

Today’s Agenda Essays needed from – Cat, Hallie, Gvantsa, Tazo, Matt, Brandon, Jamie Distribute Econ Textbooks Current Events – Jamie, Matt 1.2 Scarcity Slide Show Homework – Finish 1.2 questions 1-5 by Friday (10 points) – Bring Government textbook

At the end of this lesson, you'd better be able to:} What is Scarcity? What are opportunity costs? What are production possibilities? What is an economic model?

What is Scarcity? Scarcity – basic economic problem that we want more than we can have Humans have unlimited wants World has limited resources Resources – Water, steel, oil, trees, land, time, labor, money Wants – Water park, car, shore house, yacht

What are opportunity costs? Opportunity – All the things you can do with a resource – Palm trees can be used to make shelter, a boat, Furniture, a fire Opportunity costs – What is given up when a different option is chosen Ex. Tom Hanks has a limited amount of Palm trees He could use them to make – Planks – Rope – Fire – A chair What is the opportunity cost if he builds a better shelter?

Production Possibilities – All possible combinations of goods and services that can be produced for a fixed amount of resources in a given time period What resources are available to Tom Hanks? Labor – His labor Natural Resources – Palm trees – Coconuts – Water Capital Resources – Ice skates (axe) – Fire – Debris from the plane What are production possibilities? What can he produce with these resources?

What is an economic model? A graph that helps visualize production possibilities of the economy – Illustrates the cause and effect between the numerous interacting fixed and changing variables in an economy Fixed- does not change Variable- Things that can change – Population – Supply of a resource – Cost of labor, resource Rope Planks If Tom Hanks makes 600 ft of rope, how many planks of wood will he be able to produce? What is the maximum amount of planks he can produce? Planks and Rope

Castaway insert clip from 1:24-1:36

What are production possibilities? Pretend that you are the superintendent of Lower Moreland schools. You have a limited budget for the 2015 school year. Some teachers would like you to use the budget to buy new computers while other teachers would like you to buy new textbooks. Use the chart to answer the following questions. 1.How many computers would be purchased if you chose Point A? 2.How many computers would be purchased if you chose Point C? 3.What is the opportunity cost if you chose Point B? 4.Can you buy 8 computers and 60 textbooks? Explain. 5.What if you decided to purchase 4 computers and 30 textbooks? Is that the best choice? Explain. A C B