1. Strand 5: Concept 1: PO 1-4 Mr. Mosqueda
Economics 101
Strand 5: Concept 1: PO 1-4
Mr. Mosqueda

2. Wants & Choices
Economics is the study of CHOICES (as they pertain to PRODUCERS, CONSUMERS and the GOVERNMENT)
Everybody wants different things
Clothing, food, shelter, etc
Wants change over time (toys, etc)
Depends on society, cultures, climate, interests, etc…
Wants can be long or short term

3. Willy Wonka: I Want It Now!
Video Clip

4. Productive Resources
The price/cost of the items we want depend on three factors:
Factors of production
LAND (Resources from the Earth, unaltered by man)
LABOR (People’s effort, skills and knowledge)
CAPITAL (Man-made resources used over and over– eg., computers, machines, etc.

5. Production to Consumption
The GOODS and SERVICES produced are then sent to the consumers to be:
BARTERED without money
PURCHASED with money (savings)
(This is called consumption)

6. The Consumption Problem
Productive resources (land, labor and capital) and goods and services are limited
Human wants and needs are unlimited
Resulting in SCARCITY

7. Making Choices
There are never enough resources to produce all the goods and services people want (SCARCITY)
As a result, people must make CHOICES about what want they want to satisfy

8. Making Choices
Because things are scarce, buyers (consumers) and sellers (producers) have to make ECONOMIC CHOICES (resulting in OPPORTUNITY COSTS)
Costs (what you have to give up in order to get what you want, eg. Money, time, etc.)
OPPORTUNITY COST: the highest valued benefit given up when a choice is made
If the opportunity cost is worth it, then you should consume it!

9. What does it mean to study Economics?
Based on consumer choice and opportunity costs, economists must answer three basic questions:
WHAT goods and services will be produced?
HOW will the goods and services be produced
TO WHOM will the goods and services be distributed?

10. The Study of Economics
By answering these questions most efficiently creates the need for SPECIALIZATION and INTERDEPEDENCE resulting in trade
Economics: DECSISION-MAKING under SCARCITY

11. Independent Practice
Answer Questions 2-6 on page 357, use Chapter 13, Section 1 (PP ) for help if needed.
What you don’t finish in class, will be HOMEWORK!

12. Types of Economies
People do not make economic decisions all by themselves
Communities working together to produce, distribute and consume products is called an ECONOMY
There are 3 types of economies
Traditional, Market and Demand

13. Traditional Economies
Traditional economies rely on people working together to help the whole community
EX: Ancient tribes of hunters, families, etc.
All men hunting to “produce” enough food for the entire tribe, all resources are shared by the entire community
Pure traditional economies are rare today

14. Command Economies
Government owns and controls the factors of production and makes economic decisions for the entire community
Government decides what people “need” or “want” and distributes it to the people
Socialism (USSR), North Korea, China, Kings

15. Market Economy Opposite of a Command Economy
Private individuals produce factors of production and are free to make their own choices about production, distribution and consumption
Relies on competition to produce high quality at low prices (Walmart, Target, etc)
People are free to do as they wish in order to make money
Very little government control
Also known as Free Enterprise or Capitalism
Entrepreneurs create and run companies and small businesses
USA

16. Market Economy Benefits Makes people rich
Competition produces high quality at low costs
Encourages creativity
More choices for consumers
Encourages hard work
Disadvantages
People can take advantage of system
Greedy
Can easily get out of control
Rich get richer, poor get poorer
Government may have a difficult time intervening if necessary

17. Market Economy Adam Smith Father of Capitalism
Book: The Wealth of Nations
Absentminded
Frequently walked into things
Horrible cook
Sleepwalker/Daydreamer
Had prolonged conversations with himself

18. Independent Practice
Answer Questions 2-5 on page 369, use Chapter 13, Section 2 (PP ) for help if needed.
What you don’t finish in class, will be HOMEWORK!