Welcome to Economics!  Turn your homework into the box  Find a seat where you are free from distractions and be seated when the bell rings.  Turn your homework into the box  Find a seat where you are free from distractions and be seated when the bell rings.

Do Now  Imagine you are a parent. You have a three year old child at home that won’t eat his vegetables.  You want a healthy child, so you need a plan to figure something out. What would you do and why?  You’re the owner of a Sports Gear Shop that sells skate boards and surf boards.  Which will you sell more of? How did you choose?  Imagine you are a parent. You have a three year old child at home that won’t eat his vegetables.  You want a healthy child, so you need a plan to figure something out. What would you do and why?  You’re the owner of a Sports Gear Shop that sells skate boards and surf boards.  Which will you sell more of? How did you choose? 5 minutes End

Objectives of the day:  I can explain incentives and how people respond to them in order to create my own incentive plan.  I can explain the different points on a Production Possibilities Frontier tell us about production in order to create our own PPF.  I can explain incentives and how people respond to them in order to create my own incentive plan.  I can explain the different points on a Production Possibilities Frontier tell us about production in order to create our own PPF.

QOD  How can I draw a picture to illustrate the decisions I make?

Incentives: The Definition  An incentive is something that motivates or encourages a person to take action

Incentives: An Example Andy’s mom said that if he got all A’s on his report card, she would buy him concert tickets. Action [If you do this] Incentive [Then this will happen ] Earn good grades and be successful in school Mom will buy him concert tickets

Financial Incentives: Type I  Financial incentives are monetary or material rewards  Examples Include: cash rewards, prizes, gifts  Financial incentives are monetary or material rewards  Examples Include: cash rewards, prizes, gifts

Moral Incentives: Type II  Moral incentives offer approval, self-confidence, or recognition  Examples Include: making someone happy/sad, receiving public praise, doing the right thing  Moral incentives offer approval, self-confidence, or recognition  Examples Include: making someone happy/sad, receiving public praise, doing the right thing

Coercive Incentives: Type III “Coerce” means to use authority or intimidation to force an action  Coercive incentives are a punishment for an action or failure to act  Examples Include: fines, physical force, prison time “Coerce” means to use authority or intimidation to force an action  Coercive incentives are a punishment for an action or failure to act  Examples Include: fines, physical force, prison time

Do Incentives Always Work? INCENTIVES WORK WHEN:  They are consistent  They are fair  They fit the action INCENTIVES FAIL WHEN:  When they are too small, incentives have no effect on people’s actions  When incentives are too big, they can lead people to lie, cheat, or steal

INCENTIVES: Categorize 1. Mr. Talcott calls and congratulates the parents of students who score mastery on unit tests. 2. There is a $2,500 fine for littering (leaving your garbage outdoors). 3. One charter school offered $500 to every senior who graduates. 4. If you make honor role at KIPP you get to go on field trips. 5. DUIs (driving under the influence) are punished by jail time. 6. If you cut class, your grade will drop. 7. If you make your friend a birthday card, you might feel good. 8. If you graduate from college, you will be able to get a higher paying job. 9. Students who make straight A’s often receive larger college scholarships 10. If you get in a fight that will go on your school record so that colleges know about it. 1. Mr. Talcott calls and congratulates the parents of students who score mastery on unit tests. 2. There is a $2,500 fine for littering (leaving your garbage outdoors). 3. One charter school offered $500 to every senior who graduates. 4. If you make honor role at KIPP you get to go on field trips. 5. DUIs (driving under the influence) are punished by jail time. 6. If you cut class, your grade will drop. 7. If you make your friend a birthday card, you might feel good. 8. If you graduate from college, you will be able to get a higher paying job. 9. Students who make straight A’s often receive larger college scholarships 10. If you get in a fight that will go on your school record so that colleges know about it. 2:001:591:581:571:561:551:541:531:521:511:501:491:481:471:461:451:441:431:421:411:401:391:381:371:361:351:341:331:321:311:301:291:281:271:261:251:241:231:221:211:201:191:181:171:161:151:141:131:121:111:101:091:081:071:061:051:041:031:021:011:000:590:580:570:560:550:540:530:520:510:500:490:480:470:460:450:440:430:420:410:400:390:380:370:360:350:340:330:320:310:300:290:280:270:260:250:240:230:220:210:200:190:180:170:160:150:140:130:120:110:100:090:080:070:060:050:040:030:020:01End2:00

With a Partner  Categorize each of the following incentives as Financial, Moral or Coercive  When Finished, complete the incentive scenarios to help the Grizzlies keep fans  Categorize each of the following incentives as Financial, Moral or Coercive  When Finished, complete the incentive scenarios to help the Grizzlies keep fans 15 minutes End

Warm-up: Graphing Copy the graph and plot the points listed. (X,Y) Example: A (2,4) B (5,2) C (4,3) D (7,1) E (1,6) A 1 1

Production Possibilities Frontier (PPF) A PPF graph shows how much of two goods we can make in a certain period of time. This PPF shows how many cars and trucks Ford can make in a day

What the PPF tells us about our options…  Points on the line are possible and efficient.  Points inside the line are possible but inefficient.  Points outside the line are impossible given the current resources.  Points on the line are possible and efficient.  Points inside the line are possible but inefficient.  Points outside the line are impossible given the current resources. Possible and efficient! Possible but inefficient Impossible right now

PPF: Let’s Make One Together  Polo makes two products: shirts and pants.  In one hour, Polo can make seven pairs of pants or six shirts.  Or, Polo could make a combination of both and produce five pairs of pants and four shirts.

PPF: Let’s Read One Together  If Polo decides to use all its resources to make pants, what do they lose?  What’s the opportunity cost of producing at point C?  Should we produce at point E? Why or why not?  Should we produce at point D? Why or why not?  What choice would you make? Why? Pants Shirts B: (7,0) E: (7,8) D: (2,2) A: (0,6) C: (5,4)

PPF: Creating Our Own  What are we making?  How much can we make?  What our options?  What is our decision? Why?

With your Partner  Complete the 3 PPF practice problems.  Make sure to draw the graphs and answer the questions in your notebook.  If you finish early, ask for the Bonus Question  Complete the 3 PPF practice problems.  Make sure to draw the graphs and answer the questions in your notebook.  If you finish early, ask for the Bonus Question 15 minutes End

By Yourself  Work on the practice PPF problems  Answer the questions in complete sentences in your notebook  Silently and Independently  Work on the practice PPF problems  Answer the questions in complete sentences in your notebook  Silently and Independently 15 minutes End

Exit Ticket  Clear your desks  Silent and Independent  Clear your desks  Silent and Independent