1. Monday, January 9th
Please grab a green sheet from my “desk” – where my clipboard is.
Get out something a piece of paper and something to write with. We will be taking notes today.
HW: Current Events Presenters for next week – begin your preparations. Syllabus Acknowledgements are due tomorrow (Quiz Grade!)

2. How can we make the best economic choices?
What is Economics?
How can we make the best economic choices?

3. Why do we study economics?
Economics is the study of human efforts to satisfy what appear to be unlimited and competing wants through the use of scarce resources
It is the study of how people make decisions when resources are scarce.

4. Micro vs. Macro MICROeconomics- MACROeconomics-
Study of small economic units such as individuals, firms, and industries (ex: supply and demand in specific markets, production costs, labor markets, etc.)
MACROeconomics-
Study of the large economy as a whole or economic aggregates (ex: economic growth, government spending, inflation, unemployment, international trade etc.)
Copyright
ACDC Leadership 2015

5. How is Economics used? Positive vs. Normative
Economists use the scientific method to make generalizations and abstractions to develop theories. This is called theoretical economics.
These theories are then applied to fix problems or meet economic goals. This is called policy economics.
Positive vs. Normative
Positive Statements- Based on facts. Avoids value judgements (what is).
Normative Statements- Includes value judgements (what ought to be).
Copyright
ACDC Leadership 2015

6. 5 Key Economic Assumptions
Society has unlimited wants and limited resources (scarcity).
Due to scarcity, choices must be made. Every choice has a cost (a trade-off).
Everyone’s goal is to make choices that maximize their satisfaction. Everyone acts in their own “self-interest.”
Everyone makes decisions by comparing the marginal costs and marginal benefits of every choice.
Real-life situations can be explained and analyzed through simplified models and graphs.
Copyright
ACDC Leadership 2015

7. The Economist Perspective
Economist view the world through the lens of scarcity.
Scarcity is the idea that everything is essentially limited.
As human and property resources are scarce (limited; finite), goods and services also become limited.

8. Scarcity Creates the Fundamental Problem of Economics
Scarcity- condition that arises because society does not have enough resources to produce all of the things people would like to have
Scarcity is not due to a lack of money, it is due to a lack of resources
Shortage- occur when consumers want more of a good than producers make
Unlike shortages, scarcity always exists

9. TINSTAAFL
At the core of economics, the idea that there is nothing free in life.
Define Free…
There Is No Such Thing As A Free Lunch- economic concept that states that nothing is truly without a cost; there is always a cost involved to someone – ultimately our society.

10. “Duh, I don’t know….”
Think about the following questions while watching the clip:
Does the man addressing Milton Friedman understand the concept of free? Why or Why not?
Why are free lectures, not free?
What does Friedman mean, by “they are subsidized by those who did not attend the lecture?

11. Opportunity Costs
Because nothing in life is free, we are constantly having to make decisions and sacrifices to increase our utility (pleasure, happiness, benefit).
These sacrifices are known as opportunity costs.

12. Choices - Costs and Benefits
Opportunity Cost- the cost of the next best alternative of choosing something, or the most desirable alternative you give up to get something
Trade Off- the act of giving up one benefit in order to gain another.
Examples
Studying vs….
Going to the movies vs. reading a book
Because our decisions are based on weighing costs and benefits, our decisions are always rational, not random. We are purposeful in our decisions and choices.

13. Thinking at the Margin Marginal means additional or extra.
Should we spend more on education in this nation?
Should we purchase an extra item?
Thinking at the margin- involves adding or subtracting one more unit
Marginal cost- extra cost of one more unit
Marginal benefit – extra benefit of one more unit
Cost/benefit analysis (sometimes called marginal analysis) - comparing costs and benefits of each decisions that we make.
Sometimes there can be too much of a good thing…
Diminishing marginal utility – eventually the benefit is reduced because of
Consuming one extra (soda)

14. What are the costs?
While watching the clip think about the following questions.
What is the cost of the decision to Save Private Ryan?
What is the opportunity cost for saving 100 people?
Identify some economic buzz words?

15. Tuesday, January 10th
We will be taking notes today – have yours ready.
HW: Current Events Presenters for next week – begin your preparations. Chapter 1 Quiz is tomorrow; Chapter 1 Packet is due Friday.

16. Review with your neighbor…
Define scarcity
Define Economics
Identify the relationship between scarcity and choices
Explain how Macroeconomics is different than Micro
Explain the difference between positive and normative economics
Identify the 5 main assumptions of Economics
Give an example of marginal analysis
Name 10 Disney movies

17. Needs and Wants
In order to make decisions we have to consider our needs v. our wants.
Need- a basic requirement for survival
Want- any item not required for survival; sometimes a means of expressing a need. Example: I need food, I want pizza

18. Consumers…
Needs and wants are identified by consumers and met by suppliers who make goods or services.
Consumption- the process of using up goods and services in order to satisfy wants & needs. When you buy something or utilize a service, you are acting as a consumer.
Conspicuous consumption- the use of good or service to impress others

19. Goods
Good- a tangible commodity, a physical product that someone produces
There are different types of goods:
Consumption – HDTV, movies, Coke, haircuts
Capital – farm tractor, factory
Government – weapons systems, police and fire, public schools
Exports – produced in one country, sold in another.

20. Services Service- work that is done for someone, it is not tangible
As consumers, we use goods and services to satisfy wants and needs

21. Factors of Production - Resources
Economics call the resources that are used to make all goods and services the factors of production.
Land
Labor
Capital
Entrepreneurship

22. The Four Factors of Production
ALL resources can be classified as one of the following four factors of production:
1. Land -All natural resources that are used to produce goods and services. (Ex: water, sun, plants, animals)
2. Labor -Any effort a person devotes to a task for which that person is paid. (Ex: manual laborers, lawyers, doctors, teachers, waiters, etc.)
3. Capital -
Physical Capital- Any human-made resource that is used to create other goods and services ( Ex: tools, tractors, machinery, buildings, factories, etc.)
Human Capital- Any skills or knowledge gained by a worker through education and experience
Copyright
ACDC Leadership 2015

23. The Four Factors of Production
4. Entrepreneurship -ambitious leaders that combine the other factors of production to create goods and services.
Examples-Henry Ford, Bill Gates, Inventors, Store Owners, etc.
Entrepreneurs:
Take The Initiative
Innovate
Act as the Risk Bearers
So they can obtain _________.
PROFIT
Profit = Revenue - Costs
Copyright
ACDC Leadership 2015

24. All Resources are Scarce Resources
All goods and services are scarce because the land, labor, and capital used to create them are scarce. The more we use of one resource, the more scarce it will become in the future.