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

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

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

4. 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:

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

6. 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.

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

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

9. 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

10. 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

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

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

13. 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

14. 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)

15. 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

16. 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.

17. 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

18. 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.

19. 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

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

21. 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

22. Review  http://www.mcwdn.org/ECONOMICS/Needs WantsQuiz.html http://www.mcwdn.org/ECONOMICS/Needs WantsQuiz.html  http://www.usatestprep.com/ http://www.usatestprep.com/

23. Scarcity Review Video http://www.youtube.com/watch?v=eivSr8BcPLY&feature=related http://www.youtube.com/watch?v=eivSr8BcPLY&feature=related

24. Factors of Production Review http://www.youtube.com/watch?v=eivSr8BcPLY&feature=related http://www.youtube.com/watch?v=eivSr8BcPLY&feature=related

25. QUESTIONS???