Day 2 – Thursday, August 4th

Day 2 – Thursday, August 4th
Economics Day 2 – Thursday, August 4th

Opener: August 4th Pick up your opener on the table and then answer the following writing prompt: When you hear the word economics, what are the first ten words that you think of? Write them down and wait for further instructions. When I say “Go”, compare your list with those of your classmates. Do the words do you have in common?

How Much Would you pay?

Big Economic Idea – Scarcity
Because we have unlimited wants and very limited resources we will ALWAYS have scarcity. No matter how wealthy someone is – they always want more Scarcity is relative: what is precious/valuable (i.e. scarce) to you may not mean anything to someone else Timing Needs

Wants vs. Needs To understand scarcity we need to remember the difference between wants and needs: Need Things we need for survival – air, food, water, shelter, cloths (not cell phones!) Wants Things we desire but are NOT essential for survival. (yes – that’s a cell phone!)

Scarcity and Choice Because our limited resources won’t allow us to have everything we want/need, we have to make choices.

Economics Economics is the study of how we try to satisfy our needs and wants by making choices. Because people act: individually, in groups (such as businesses) and through governments economists study each of these groups.

Economics Day 3 – Monday, August 8th

Connecting Themes in Economics
Each of the six content units in this course will connect to four main themes. Scarcity – The effect of limited resources on making charges. Voluntary Exchange - The ways in which people gain from trade Incentives - The role of incentives in making choices (Ex. Profit Motive) Economic Interdependence - The costs and benefits of interdependency between two or more individuals, businesses, and/or nations

What is Economics? The study of Money? The study of the economy?
The study of choices? Economics is the study of how individuals and nations make choices about how to use their scarce/limited resources to fill their unlimited needs and wants. Microeconomics- Deals with individual units of the economy. Individual Units can mean a person, a family or a community Macroeconomics- Deals with the economy on a national or global level

Scarcity: Basic Economic Problem
When our wants and needs exceed our resources we have the basic economic problem of… Scarcity

Yes, we always want more. SCARCITY – LIKE DEATH & TAXES – INESCAPABLE!
No matter how much money we have, we always want more. Yes, we always want more. E. Napp

Scarcity: The basic economic problem
Unlimited needs and wants with limited resources. Primary needs include air, water, food, shelter, clothing, sleep. Secondary needs are called wants which include cars, Abercrombie, jewelry. Intangible needs include love, peace, happiness, pain.

Who makes the decisions?
Consumers- make decisions on what to buy Producers- make decisions on what to produce Possible products fall into two categories: Goods- physical objects to purchase Services- actions/activities performed for a fee

resources Anything that people use to make or obtain what they need or want is called a…resource. In economics, resources are sometimes called inputs. Resources that can be used to produce goods and services are called FACTORS OF PRODUCTION.

Factors of Production Factors – in math it’s one number multiplied by another number In economics, it’s one resource that is added to others to create things consumers want. Economic resources are the goods or services available to individuals and businesses used to produce valuable consumer products

4 Factors of Production Natural Resources – anything provided by Mother Nature This includes not just land, but anything that comes from the land. Some common land or natural resources are water, oil, copper, natural gas, coal, and forests. Land resources are the raw materials in the production process. These resources can be renewable, such as forests, or nonrenewable such as oil or natural gas. The income that resource owners earn in return for land resources is called rent.

4 Factors of Production Natural Resources Human Resources /Labor - people’s physical and intellectual value Labor is the effort that people contribute to the production of goods and services. Labor resources include the work done by the waiter who brings your food at a local restaurant as well as the engineer who designed the bus that transports you to school. It includes an artist's creation of a painting as well as the work of the pilot flying the airplane overhead. If you have ever been paid for a job, you have contributed labor resources to the production of goods or services. The income earned by labor resources is called wages and is the largest source of income for most people.

4 Factors of Production Natural Resources Human Resources - Capital resources - are goods produced and used to make other goods and services. Think of capital as the machinery, tools and buildings humans use to produce goods and services. Some common examples of capital include hammers, forklifts, conveyer belts, computers, and delivery vans. Capital differs based on the worker and the type of work being done. The income earned by owners of capital resources is interest.

4 Factors of Production Entrepreneurship –
Natural Resources Human Resources Capital resources Entrepreneurship – An entrepreneur is a person who combines the other factors of production - land, labor, and capital - to earn a profit. The most successful entrepreneurs are innovators who find new ways produce goods and services or who develop new goods and services to bring to market. Entrepreneurs thrive in economies where they have the freedom to start businesses and buy resources freely. The payment to entrepreneurship is profit.

Factors of Production Stand and Sort
Everyone should be getting a factor of production. Think about what type of factor of production it is and get ready to come put it on our class charts!

Economics Day 4 – Tuesday, August 9th

Production Possibilities Frontier
We’re conducting an experiment so I’m firing 20% of you. Keep in touch. We want to watch your behavior. Write if you get work. Really!

The Production Possibilities Frontier
Introducing… The Production Possibilities Frontier Featuring the following simplifying assumptions… a society that produces only two goods the efficient use and full employment of resources fixed technology a single snapshot in time

A B C D E F G units of potatoes 6 5 4 3 2 1 units of apples

units of potatoes A 6 5 4 3 2 1 B C D E F G units of apples A B C D E F G units of potatoes 6 5 4 3 2 1 units of apples

Production Possibilities…
Production Possibilities Curve The production possibility curve is a hypothetical representation of the amount of two different goods that can be obtained by shifting resources from the production of one, to the production of the other. The curve is used to describe a society's choice between two different goods Sometimes called the Production Possibilities Frontier

units of potatoes A 6 5 4 3 2 1 B C D E F G units of apples A B C D E F G units of potatoes 6 5 4 3 2 1 units of apples

units of potatoes A 6 5 4 3 2 1 Constant Cost B C D E F G units of apples One unit of apples costs one unit of potatoes. One unit of potatoes costs one unit of apples.

units of potatoes A 12 10 8 6 4 2 Constant Cost B C D E F G units of apples One unit of apples costs two units of potatoes. One unit of potatoes costs one-half unit of apples.

units of potatoes 6 5 4 3 2 1 Constant Cost A B C D E F G units of apples

units of potatoes 6 5 4 3 2 1 Constant Cost A B C D E F G units of apples One unit of apples costs one-half unit of potatoes. One unit of potatoes costs two units of apples.

Can this society produce at production combination I?
Production Possibilities Frontier Production Possibilities Frontier units of potatoes units of apples 6 5 4 3 2 1 A B C D E F G I Can this society produce at production combination I?

Can this society produce at production combination H?
Production Possibilities Frontier Production Possibilities Frontier units of potatoes units of apples 6 5 4 3 2 1 A B C D E F G I H Can this society produce at production combination H?

Events that can expand production possibilities outward… A technological advance (remember – a technology is anything that makes life easier) rail cars refrigeration computers An increase in human or natural resources population increase new discoveries Capital investment new factories new infrastructure Tell island story – coconuts and baskets

Once upon a time on the tiny island of Nor, all of the people were involved in their daily labor - knocking coconuts out of trees, carrying them to a pick-up point, and delivering them from the pick-up point to the market. All of the people, except Frick and Frack, that is. Frick and Frack weren't feeling well on this day and were sitting, listless, under a palm tree. As they sat, Frick was, almost subconsciously, picking up palm leaves and weaving them together, in and out, in and out. Frack glanced down at Frick's work and asked, "What are you makin' there?" Frick looked down and puzzled, "I'm not really makin' nothin'." Tell island story – coconuts and baskets

But, actually, he had made something. It was a small mat. Frack said, "Keep going," and, pretty soon, the mat was about a square foot. The two of them pondered what could be done with this collection of palm leaves when, suddenly, Frack said, "Keep going, but start weaving the leaves tighter." As Frick progressed, the sides of the mat began to turn up, and the mat was slowly turning into a large basket. When the mat got to be about two foot in diameter, Frack said, "That should be enough." And, with that said, he began to place coconuts onto the mat - it held 18. Frack said, "Can you imagine how much easier it will be to carry coconuts with this?" Frick could imagine it! Tell island story – coconuts and baskets

Frick and Frack took their good idea to their supervisor, Frock, who immediately ordered that they remain under the tree and continue to make mats. Tell island story – coconuts and baskets

units of capital goods (mats) A 6 5 4 3 2 1 B C D E F G units of consumer goods (coconuts)

units of capital goods (mats) A 6 5 4 3 2 1 B C I D E F G units of consumer goods (coconuts)

units of capital goods Production Possibilities Frontier A 6 5 4 3 2 1 B C D E F G units of consumer goods One unit of capital goods costs one unit of consumer goods. One unit of consumer goods costs one unit of capital goods.

Day 5 – Wednesday, August 10th
Economics Day 5 – Wednesday, August 10th

Opener – Wednesday, August 10th
Good morning! Please pick up your Opener Writing Prompt as you walk in, sharpen any pencils and get started. While you’re writing, I will be: Redoing seating for our updated roster (so you may need to move around a little bit) Taking attendance (say ‘here’ when your name is called)

PPC Rules Any point on the PPC uses existing resources efficiently
Any point outside the PPC is not realistic, attainable or sustainable given existing resources Any point inside the PPC is inefficient

PPC Example

So Can a Production Possibilities Curve Shift OuT?
Events that can expand production possibilities outward… A technological advance (remember – a technology is anything that makes life easier) rail cars refrigeration computers An increase in human or natural resources population increase new discoveries Capital investment new factories new infrastructure

So Can a Production Possibilities Curve Shift IN?
Events that can reduce production possibilities and cause a shift: Natural disasters hurricanes earthquakes tornadoes Wars Reduction in resources layoffs rising resource prices Inefficiency human resources – employees sick, need training, etc. capitol resources – equipment breaks, new technologies not used, etc.

Let’s Practice! If we experience improvements in robot manufacturing technology, what would happen to our PPC?

Let’s Practice! If a tornado destroys a large portion of our wheat crop, what would happen to our PPC?

Guided Reading Using your nice, new class textbook begin reading on page 2 and writing in the missing words on your Guided Reading When I call your name, please bring me the following: Class Textbook Notebook Divider Pages Colored Pencils

Day 6 – Thursday, August 11th
Economics Day 6 – Thursday, August 11th

So a PPC shows different Choices
Because of Scarcity, people/companies/countries must make choices about how to allocate (or distribute) resources so that the greatest number of needs and wants will be satisfied. There are 3 basic question every society must ask. 1. What to produce? 2. How to produce? 3. For whom to produce?

Economic Systems An economic system is a system of production and exchange of goods and services as well as allocation of resources in a society. The system is determined by who answers the 3 basic economic questions What goods & services to produce? How should these goods & services be produced? Who gets to consume these goods & services?

Traditional Economy Traditional Economy – an economic system that is based on customs and beliefs. People will make what they’ve always made. They do things the same way as their parents and grandparents. People are not free to make their own decisions on what they want. Exchange of goods is done through bartering – exchanges with no money involved Examples of these societies do not really exist any more. Native American societies and India in the past were like this.

Command Economies Command Economy – One in which a central authority makes all economic decisions about how best to allocate resources. Examples of these economies include Cuba, North Korea, and China.

Market Economy Market Economy – One in which people or businesses’ use their own best interest to make a profit. These economies are based on supply and demand. Buyers and sellers answer the economic questions as they come together to exchange goods and services. Examples include the USA, Great Britain and Japan

Mixed Economy Market + Command = Mixed Economy
There are no pure market or command economies. To some extent, all existing economic systems demonstrate characteristics of both systems and can be called mixed economies. Economies are usually closer to one type of economic system than the other. People/businesses own most resources and determine what & how to produce, but the government may regulate certain industries.

Strengths of these economies
Traditional – Sets certain economic roles for all members of the community. It is stable, predictable, and continuous for life. Command – Capable of dramatic changes in a short time. Market – Very resilient and self-sustaining. Is able to self- adjust to change gradually. Individual freedom for everyone. Notable lack of government interference. Decentralized decision making. Variety of goods and services. High degree of consumer satisfaction.

Weaknesses of these economies
Traditional –Discourages new ideas and new ways of doing things. Usually has a lack of progress. Command – Does not meet the needs of consumers. Lacks incentives to get people to work. Has little flexibility to deal with small changes. New ideas are discouraged. Market – Rewards only productive resources. Many people are too young, old, or sick to work. Must guard against market fluctuations.

Economic goals of the USA
Economic Freedom – Be whatever you want to be. Economic Efficiency – Waste few resources Economic Equity – Anyone can get ahead regardless of gender, ethnicity, etc. Economic security – Protect workers from downtimes in economy Full employment – Everyone who can work should work Price stability – Prices shouldn’t jump up or drop down too dramatically. Economic growth – Economy should improve every year

All Market Economies share…
Economic Freedom – Be what you want to be Voluntary Exchange – Trade with whoever you want (almost) Private Property – Government doesn’t own business’ and land Profit motive – Motivated by Money

Continuum of economic systems

Economics Day 4 – Friday, August 12th

Let’s Show What you Know!
Please turn in your Unit One Vocabulary sheet, sharpen your pencils and let’s get ready to start our Vocabulary Quiz.

Economic Systems Stand & Sort
Remember: Three basic economic questions Four types of economic systems that answer those three economic questions You will be given a description of an economic system. Look through your notes to determine which economic system it describes. When instructed, you will each put your description with the economic system you feel it describes and then explain why you chose that economic system. (remember – if you don’t know we can think it through & figure it out!)

Economics Day 5 – Monday, August 15th

Opener – Writing Prompt
As you arrive, please pick up an Opener Writing Prompt sheet on the front table Analyze the following diagram and explain what you think it means in 5-7 sentences.

Economic Functions of Government
SSEF5 The student will describe the roles of government in a market economy. a. Explain why government provides public goods and services, redistributes income, protects property rights, and resolves market failures. b. Give examples of government regulation and deregulation and their effects on consumers and producers.

Would you…? Pay for some other child’s school?
Pay for somebody else’s bus ride? Pay to clean a restroom at a park? Pay to build a new road outside of your house? If you have answered no to these questions, then you understand why we need government interaction in the economy. If you answered yes…well…congrats! You’re a great human being.

Government’s Role 1) Provide a Legal System 2) Maintain Competition 3) Public Goods and Services 4) Redistribute Income 5) Correct Market Failures 6) Stabilize the Economy

Provide a Legal System Make and enforce laws to protect private property rights Examples: courts, monetary system

Maintain Competition Regulates monopolies Examples Anti-trust laws

Public Goods and Services
Uses tax dollars to provide goods and services that private individuals wouldn’t provide Benefits everyone Examples: Parks, national defense, schools

Redistribute Income Taxing large income groups to provide for those in need Examples: social security, Medicare, Medicaid

Resolve Market Failures
Corrects externalities(unintended side effects or reactions to an action) Positive externality- unintended benefit Negative externality- unintended cost Examples: Environmental pollution, subsidies, education

Stabilize the Economy Reduces unemployment and inflation and promotes economic growth Examples Government budgets, monetary supply

Rational Decision-Making
SSEF2 The student will give examples of how rational decision-making entails comparing the marginal benefits and the marginal costs of an action. a. Illustrate by means of a production possibilities curve the tradeoffs between two options. b. Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs.

How do you know if you are wisely using resources?
By studying productivity Productivity is the level of output that results from a given level of input (aka resources). Economic Goal >>> Use resources/inputs as efficiently as possible to create the largest amount of output or productivity.

Efficiency A company that is not wisely using its resources should improve efficiency. Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. 'Economic Efficiency' is a broad term that implies an economic state in which every resource is optimally allocated to serve each person in the best way while minimizing waste and inefficiency. When an economy is economically efficient, any changes made to assist one person would harm another.

Efficiency when there’s room for improvement
When companies strive to improve efficiencies they might introduce division of labor Division of Labor involves assigning one or more task/s to each individual worker. Each worker specializes in that particular task/s and becomes proficient (or very efficient) at that task. The production of most goods can be broken down into a number of specific tasks (division of labor), with each of these tasks assigned to specific workers (specialization)

Three types of Exchange
Barter- A direct trade of goods and services without money. Money- Any item commonly accepted in exchange of goods, services, or the payment of debts. Credit- A form of exchange with a promise to repay over a specified time.

Better than barter In order to avoid the problems of barter, goods and services are assigned a value that can be expressed as an amount of money (price). Value is determined by the price someone is willing to pay for the item.

Remember the basic economic problem?
1. Scarcity – causes us to choose. 2. Utility- the usefulness of an item to a person Utility can vary from person to person. Now we see that a diamond is both scarce and it also has utility. Water has utility, but it is not scarce enough to give it a high value.

Increasing Opportunity cost
Every specific allocation of resources has trade-offs. The measured cost of the next best alternative is the opportunity cost, which is what is given up to produce a specific product. Generally, as more resources are allocated to produce one good, the cost of an additional unit of the good usually increases after a certain point. The reason is because when there are only a few units of the goods produced, then the most suitable factors of production are used, which lowers the price of the good. But as the number and quantity of goods increases, then other factors of production must be used that will not be as efficient. This is called the Law of Diminishing Returns.

Law of Diminishing Returns

Marginal Cost vs. Marginal Benefit
Because the opportunity cost of producing extra units of goods increases after a certain point, then there is a point for which the cost of producing the good is less than the benefit to society.

marginal Producing one more unit >>> the cost of producing it >>> marginal cost the benefit derived from it >>> marginal benefit

Marginal Cost & Allocation Efficiency
Soooo…an efficient allocation of resources is maximized when the marginal benefit equals the marginal cost of producing one extra unit. Marginal Benefit = Marginal Cost

The Goal: MB = MC

Circular Flow of Economic Activity
Each time we buy something we are contributing to the economy. These purchases are just part of a bigger piece of the economic puzzle. The economy works in a circular motion known as the circular flow diagram in economics.

Different ways to view the same information
Since it’s circular, the elements can be viewed from different perspectives. It’s the same information! It’s just that the Businesses/Firms and Households are on the left and right of the diagram (instead of the top and bottom). So don’t be confused!

Two circles going in opposite directions
1. Factor/Product Circle Just start with the households >>> Households sell land, labor & capital in the Factor Market Businesses use the factors of production to create goods & services Businesses sell these goods and services to the households in the Product Market.

Circle of Money Money Flow Circle (going in the opposite direction as the Factor/Product circle) Once again, start with the Households >>> Households buy the goods and services These purchases become revenue for the businesses The business then use that revenue to pay for the factors of production One of the factors of production is labor/workers – the wages paid to workers becomes income to the households which gives households the money to buy goods and services.

Economics Day 8 – Tuesday, August 16th

As you enter… Pick up a Crash Course Video Q&A
We’ll get started as soon as we take attendance!

Unit One Review & Study Guide
Pull out your Unit One Review and Study Guide You can hopefully complete it in class. If you don’t get finished, you need to complete it at home.

Day 9 – Wednesday, August 17th
Economics Day 9 – Wednesday, August 17th

As you enter… Please: Turn your phone to silent
Pack your phone in your bookbag/purse Put everything but 1-2 pencils up at the front of class (I’ll keep them safe for you!) If needed, sharpen your pencils

Time for our first unit test!
As you get your Zipgrade bubble sheet – make sure it’s got your name on it Please only write on your Zipgrade bubble sheet (NOT on the question booklet) We’ll review the test directions – raise your hand if you have any questions. Test Mode until the last test is turned in: No talking No squawking (no noises or disruptions) No walking (raise your hand and I’ll come to you) No gawking (eyes on your own paper, keep your answer sheet covered)

Let’s Review Pull out your smartphone and open up a web browser (Chrome, Internet Explorer, etc.) Go to Kahoot.It.com Enter our session code and join our review Remember your Kahoot name needs to include: Your first name or your last name Keep it clean or you’ll get deleted!

Day 2 – Thursday, August 4th

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