1. Burning Question #1
-Suppose it is Thanksgiving, and there’s that one item you really want on sale at a great price, at two different stores. What are the two stores? Which one would you choose first? -List two different items you would be in search of for yourself on Black Friday? -Supposing you could only choose 1, which do you pick?

2. What is Economics?
Economics- the study of how individuals, families, businesses and societies use their limited resources to fulfill their unlimited wants. Two Parts 1. Macroeconomics- deals with the economy as a whole and decision making by large units such as governments. (All the trees in the forest) 2. Microeconomics- deals with behavior and decision making by small units such as individuals and firms. (A specific tree in the forest)

3. Everyone Must Choose So What’s The Cost- Time, Money???
Economics- the study of how individuals, families, businesses and societies use their limited resources to fulfill their unlimited wants.
So What’s The Cost-
Time, Money???
Opportunity Cost- The value of the next best alternative that had to be given up to do the action that was chosen.

4. Why Choose? Wants vs Needs
Scarcity- people do not and cannot have enough income or time to fulfill their every want.
Trade-offs- Exchanging one thing for another.
“I wanted a iPad3, however elected for the
Kindle Fire after seeing the price.”
“I choose to go to the movies rather than study
for my economics exam.”
“I choose to eat at home rather than eat out.”

6. Check for Understanding
___________ = the study of how individuals, families, businesses and societies use their limited resources to fulfill their unlimited wants. ___________ = deals with behavior and decision making by small units such as individuals and firms. ___________ = people do not and cannot have enough income or time to fulfill their every want. ___________ = The value of the next best alternative that had to be given up to do the action that was chosen.

7. Scarce Resources Influences Production
5 factors of production 1. Land- Refers to natural resources that exist without human intervention. 2. Labor- The work people do to produce goods & services is a resource. -Good= tangible items people can buy (medicine, clothing, and computers) -Service= activities done for a fee. (maids, cooks, hairstylists etc.…)

8. (involves a willingness to take risks in order to reap profits)
5 factors of production
3. Capital- Manufactured goods used to make other goods. Buildings, trucks, factories etc.…
-Increases productivity
*PHYSICAL & HUMAN
Entrepreneurial Talent- Usefulness of individuals to START new facilities and BUILD new products and processes and IMPROVE management techniques.
(involves a willingness to take risks in order to reap profits)

9. 5 factors of production
5. Technology- Includes the use of land, labor or Capital to produce goods & services more efficiently.

10. Matching??? A- Land B- Labor C- Capital D- Entrepreneurial Talent
____ Includes the use of land, labor or Capital to produce goods & services more efficiently. ____ Manufactured goods used to make other goods. Buildings, trucks, factories etc.… ____ Refers to natural resources that exist without human intervention. ____ Usefulness of individuals to start new facilities and build new products and processes and improve management techniques. ____ The work people do to produce goods & services is a resource.
A- Land
B- Labor
C- Capital
D- Entrepreneurial Talent
E- Technology

11. How Did You Fare? A- Land B- Labor C- Capital
E___ Includes the use of land, labor or Capital to produce goods & services more efficiently. C___ Manufactured goods used to make other goods. Buildings, trucks, factories etc.… A___ Refers to natural resources that exist without human intervention. E___ Usefulness of individuals to start new facilities and build new products and processes and improve management techniques. B___ The work people do to produce goods & services is a resource.
A- Land
B- Labor
C- Capital
D- Entrepreneurial Talent
E- Technology

12. Win Lose or Draw 5 Factors of Production

13. “FOP” and “PPC”
Take out your books and turn to page 10. We will be reading aloud FOP “effect on income and wealth.” Take out your books and turn to page 17. We will be reading aloud “production possibilities curves”

14. Textbook page 18 Answer question 4 on page 19

15. The 3 Basic Economic Questions
All economic systems that have ever existed or will ever exist have to answer some basic questions. Let's explore the questions and some answers.
The 3 Essential Economic Questions
1 - What goods and services will be produced?
2 - How will the goods and services be produced?
3 – Who will get the goods and services?

17. Economic Systems 3 Types of Economic Systems
Traditional Economy- 3rd World Countries
Ex-Aborigine peoples of Australia
Command Economy- Communist countries
Ex- Former Soviet Union or China
Market Economy- Developing nations
Ex- India
Mixed Market Economy- Developed nations
Ex- US & Great Brittan, Canada

18. Economic Systems Types of Economic Systems 1. Traditional Economy-
Usually tribal or family led. The leaders make the rules and everyone else follows & shares benefits.

19. Traditional Economy
Pro- Easy to follow. Everyone has a well defined role to follow
Con- Very difficult to change
Leaders People Consumers

20. Economic Systems Types of Economic Systems 2. Command Economy-
The government controls all the factors of production and dictates how the nation answers the 3 economic questions.

21. Command Economy Pro- Few people are left out. Less poverty.
Con- Ingenuity is stifled.
Lack of worker incentive.
Government Business People Consumers

22. Adam Smith- Pure Capitalism- Lazzie Faire
Economic Systems
Types of Economic Systems
3. Market Economy-
The people control the factors of production and determine independently how we answer the 3 economic questions.
Adam Smith- Pure Capitalism- Lazzie Faire

23. Economic Systems Types of Economic Systems 4. Mixed- Market Economy-
The people control the factors of production however the people & the government determine how to answer the 3 economic questions.

24. Market Economy “Pure Capitalism”
Pro- People have more say & own factors of production
Con- Many will struggle
Business Government People
Consumers

25. Con- Some people will struggle.
Mixed Market Economy
Pro- People & the government have more say & BOTH own factors of production
Con- Some people will struggle.
Business Government People
Consumers

28. Business Perspective
So how can we make money… In order to understand this we must begin by answering 3 Basic Economic Questions

29. The 3 Basic Economic Questions
All economic systems that have ever existed or will ever exist have to answer some basic questions. Let's explore the questions and some answers.
The 3 Essential Economic Questions
1 - What goods and services will be produced?
2 - How will the goods and services be produced?
3 – Who will get the goods and services?

30. Basic Economic Questions
Throughout history different countries have used different organizing methods to answer the basic economic questions. Focusing on the market system…
Some of the main characteristics of a market system are
Private property Freedom of enterprise and choice
Self-interest Competition
markets and prices Tech and capital
Specialization Use of money
of resources Active, but limited, gov

31. 1) What will be produced?
The answer to the first question is that we let the supply and demand of the market determine what and how much to produce. Goods that consumers are both willing and able to buy, and producers are willing and able to make, get made in the amount that both working together see fit.
Note consumers “vote” for goods to be made with their dollars and the goods are likely to be made if firms can make profit.

32. 2) How?
The answer to the second question is producers will use the least cost combination of inputs to produce a given level of output. The reason for this is twofold.
1. First, by using the least cost methods more profit will be earned by the producer. Producers certainly like to make profit.
2. But, the second reason is that if a producer does not use least cost methods of production, when other producers do, the high cost producer may not be able to compete with the other low cost producers and will eventually go out of business.

33. Resource use
Say there are three ways of making a good from a technical point of view. Here we list the number of units of each resource needed to make a good:
Resource technique 1 technique 2 technique 3
Land
Labor
Capital ET

34. Resource use
Next what each resource costs per unit and we can then see how much it costs to make the units under each technique. For now, let’s just say we look to the market to find what it costs to get each unit of each resource. Here technique 2 would be used!
Resource technique 1 technique 2 technique 3
Land $2 4 ($8) 2 ($4) 1 ($2)
Labor $1 1 ($1) 3 ($3) 4 ($4)
Capital $3 1 ($3) 1 ($3) 2 ($6)
Entrepreneurial $3 1 ($3) 1 ($3) 1 ($3)
ability
Total Cost $15 $13 $15

35. 3) For Whom?
The answer to the third question is those who are willing and able to pay for the items made. We become able to pay by giving up something that is valuable to us - labor or other assets.

37. Economic Theory
The Big 3
Adam Smith
Karl Marx
John Maynard Keynes

38. Father of Modern Economics
Economic Theorist:
Adam Smith
is to
Market Economy
Wrote
“Wealth of Nations”
is the
Father of Modern Economics

39. Economic Theorist: Adam Smith
Courtesy of Wikipedia

40. “Communist Manifesto”
Economic Theorist:
Karl Marx
is to
Command Economy
Wrote
“Communist Manifesto”
is the
Founder of Marxism
aka- communism

41. Economic Theorist: Karl Marx
Courtesy of Wikipedia

42. End of Great Depression Father of Modern Economics
Economic Theorist:
Keynes
is to
Mixed Market Economy
End of Great Depression
Father of Modern Economics

43. Economic Theorist: Keynes
Courtesy of Wikipedia