Unit 2: The Economy of Michigan-overview

Standards covered: 3 - E1.0.1: Explain how scarcity, opportunity costs, and choices affect what is produced and consumed in Michigan. 3 - E1.0.2: Identify incentives (e.g., sales, tax breaks) that influence economic decisions people make in Michigan. 3 - E1.0.4: Describe how entrepreneurs combine natural, human, and capital resources to produce goods and services in Michigan. 3 - E1.0.5: Explain the role of business development in Michigan’s economic future. 3 - E2.0.1: Using a Michigan example, describe how specialization leads to increased interdependence (cherries grown in Michigan are sold in Florida; oranges grown in Florida are sold in Michigan). 3 - E3.0.1: Identify products produced in other countries and consumed by people in Michigan. 3 - G4.0.1: Describe major kinds of economic activity in Michigan today, such as agriculture (e.g., corn, cherries, dairy), manufacturing (e.g., automobiles, wood products), services and tourism, research and development (e.g., Automation Alley, life sciences corridor, university communities), and explain the factors influencing the location of these economic activities. 3 - C3.0.2: Identify goods and services provided by the state government and describe how they are funded (e.g., taxes, fees, fines).

Natural Resources What are natural resources? How do we use natural resources in our daily lives?

Trees are a large natural resource located in the Upper Peninsula.

Vocabulary scarcity: opportunity cost: produce: consume: when there is not enough of a good or service to meet a demand (what people want) opportunity cost: the cost of a choice for example-You want to ride your bike, play video games, and go to a sleep over, but you can only choose one. The ones that you don’t choose are your opportunity costs. produce: to make something consume: to buy or use something that is made

Vocabulary-Continued page 2 entrepreneur: a business person natural resource: something found in nature that is used to meet people’s needs-resources used to make or grow things human resource: the people who provide their skill’s and energy to work in a business capital resource: tools, machines, and equipment used in a business to make a product

Vocabulary-continued page 3 incentive: a reward for doing something sales tax: an extra amount added to the cost of most things bought in stores which helps pay for the government economic decisions: choices that people make when they are spending money agriculture: farming manufacturing: production of goods

Vocabulary-continued page 4 tourism: the business created by people traveling outside of their usual environment for vacation goods and services: goods-items that people buy services-tasks provided by other people that you must pay for for example: getting your hair cut research and development: when companies improve products and make new products

Vocabulary-continued page 5 specialization: each person of a group learns to do one job and does it very well interdependence: people depending on each other for products they each need import: a product that people buy that was made in another country export: a product that is sent to another country and sold

What are some products made in Michigan? boat parts cardboard log homes paper frozen foods baby food clocks cars office furniture cereal scientific equipment baking mixes soda pop sugar potato chips trucks cement sausage Refer to product map on the next slide!

Producers/Consumers

Optional activity: Use the map on slide 8 and have the students identify natural, human, and capital resources used to make a product.

Be Thinking! How does scarcity, opportunity cost, and choices affect what is produced and consumed in Michigan? How do entrepreneurs combine natural, human, and capital resources to produce goods and services in Michigan? What incentives help people decide how to spend their money?

Location of Economic Activity Why is this economic activity located here? The products that come from Michigan and it’s cities are made from the natural resources of that area. For example: Cardboard and log homes come from Ontonogan. Why do you think they make those things in Ontonagon? Businesses start where the resources are Cereal is made in Battle Creek Michigan…corn is grown in this area and it goes into the corn flakes. Grand Rapids was a good place to make furniture; cherry, maple, and oak trees grow nearby and the Grand River helped to make the machines go.

Specialization in Michigan Michigan is known as a “water wonderland” Michigan’s water is good transportation for ships to get Michigan products to other states Michigan’s wood and iron ore has been used in automobiles and furniture Michigan is known for tart cherries, blueberries, pickling cucumbers, red potatoes, potatoes for chips, and different flowers People start to specialize in things. Doing what you do best and using your strong points is called specialization. People start to depend more on each other when they specialize. Products start to cost you less if you buy from people who specialize.

Michigan’s Interdependence It’s good to export products because it brings money to Michigan and makes jobs for Michigan people. We cannot make everything that we need here in Michigan. To get these tings we have to get them from other places. Often we buy things from other countries. If things come from other countries they are called imports. Bananas and chocolates are two examples. It is too cold for bananas to grow here and it is too hot to grow apples and cherries in the jungles where the bananas grow. The bananas farmer starts to depend on the apple farmer and vice versa. Cherries grown in Michigan are sold in Florida and oranges grown in Florida are sold in Michigan

Be Thinking! How do new businesses affect Michigan’s economy?

Services Provided by the State Government road construction road workers state parks police officers ambulance fire fighters teachers These services are paid for using money received from citizens. sales tax property tax income tax fines tickets fees land surveys driver’s license