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CHAPTER 1 WHAT IS ECONOMICS?S1: Scarcity and Factors of Production
S2: Opportunity Cost
S3: Production Possibilities Curves
BELL WORK: S1 (10 MINUTES)
Get book, folder, and texts
Pick up Chapter 1 and Unit Worksheets3 hole punch them and place in Folders
Answer A – E on Unit 1 Essay Warm-upPgs. 29-30
SECTION 1: SCARCITY AND FACTORS OF PRODUCTION
Chapter 1 Essential Question Need to be able to answer this!!
“How can we make the best economic choices?” Write at top of S.1 notes
Objectives to learn Why scarcity and choice are the basis of
economics What entrepreneurs do 3 factors of production and differences bt
human/physical economics How scarcity affects the factors of production
KEY TERMS
Turn to page 2 Slideshow on Web
http://www.pearsonsuccessnet.com/snpapp/iText/products/0-13-369833-5/Flash/Ch01/Econ_OnlineLectureNotes_ch1_s1.swf
WHY ARE SCARCITY/CHOICE BASIS OF ECONOMICS?
How does Scarcity force people to make economic choices? Makes everyone make choices by making us
decide which options are most important to us Scarcity states there are limited goods/services
for unlimited wants. People need to make choices in order to satisfy m/i
wants People satisfy their needs/wants w/
goods/services People’s needs/wants are unlimited, goods/services are
not
WHY ARE SCARCITY/CHOICE BASIS OF ECONOMICS?
Economics begins w/idea that people cannot have everything they want/need
The fact that limited amounts of goods and services are available to meet unlimited wants is called scarcity. Scarcity forces people to make choices but it is
not the same as a shortage. Shortages are temporary while scarcity always
exists.
WHAT DO ENTREPRENEURS DO?
Entrepreneurs play a key role in turning scarce resources into goods/services
Willing to take risks in order to make a profit They:….
Develop original ideas Start businesses Create new industries Fuel economic growth
1st Task is to assemble factors of production Land Labor Capital
FACTORS OF PRODUCTION: LAND
Refers to all natural resources used to produce goods/services
Resources include: Fertile land for farming Oil Coal Iron Water Forests
FACTORS OF PRODUCTION: LABOR
Labor is the effort people devote to tasks for $$
Labor includes: Medical care provided by a doctor Instruction provided by a teacher Tightening of a bolt by an assembly-line worker Creation of painting by an artist Repair of television by technician
FACTORS OF PRODUCTION: CAPITAL
Refers to any human-made resource that is used to produce other goods/services
Economy requires both human/physical capital Physical
Buildings Equipment Tools
Human College education Training Job experience
BENEFITS OF CAPITAL
Key factor for production b/c people and companies can use it to save time/money
Benefits of capital Increased efficiency Increased knowledge Better time-management Increased productivity
SCARCE RESOURCES
Checkpoint: Why are goods/services scarce? Goods/services are scarce b/c the resources used
to produce them are scarce Only so many natural resources available to
produce goods Labor for production can be limited Physical capital can be limited for many
industries Each resource may have alternative uses
People, businesses, govt.s must choose which alternative they want most
LESSON CLOSING
Entrepreneur simulation on Pearson Class Demonstration
Go back and answer the Chapter Essential Question “How can we make the best economic choices?”
Found on page 4 of Chapter Warm-up A-D
Homework Read Section 2: pgs. 8-12
SECTION 2: BELL WORK
Get books, folders
2 Choices;Grab scratch paper and copy “bubble” chart on pg.
8Put “bubble” chart at top of S.2 notes
AnswerQuestions to captions on pg. 5 and 9Think, pair, share
S.2: OPPORTUNITY COST
Guiding QuestionHow does opportunity cost affect
decision making? Write at top of S.2 Notes
Objectives to learn Why every decision involves trade-offs The concept of opportunity cost How people make decisions by thinking @ the
margin Key Terms
http://www.pearsonsuccessnet.com/snpapp/iText/products/0-13-369833-5/Flash/Ch01/Econ_OnlineLectureNotes_ch1_s2.swf
HOW DOES OPPORTUNITY COST AFFECT DECISION MAKING?
Every time we choose to do one thing, we are giving up the opportunity to do another
When we make decisions about how to spend our scarce resources, like money/time, we give up our chance on something else
All indiv’s, businesses, and large groups make decisions that involve trade-offs
Trade-offs involve things easily/not easily measured Money, property, time, and things not easily
(enjoyment or job satisfaction)
HOW DOES OPPORTUNITY COST AFFECT DECISION MAKING?
Businesses and Govt. trade-offs Businesses make trade-offs when they decide
how to use their factors of production Famer uses land to plant corn, cannot use same land
to plant soybeans
Govt’s make trade-offs when they decide to spend money on military needs instead of domestic, or vice-versa
Checkpoint: What are trade-offs? Answer economics and you from BW
WHAT IS OPPORTUNITY COST?
Most trade-offs have one of the “rejected” alternatives being more “desirable” than rest
That most desirable alternative given up by the decision is the opportunity cost
HOW DO PEOPLE MAKE DECISIONS
Decision making grid Can help you decide if
you are willing to accept the opportunity cost of a choice
Read thru pg. 10 Answer 2 ?s
Thinking @ the Margin When you decide how
much/less to do you are thinking on the margin
Involves comparing opportunity costs/benefits Called cost/benefit
analysis
THINKING AT THE MARGIN
Marginal Costs and Benefits To make good decisions you must weigh the
marginal costs against marginal benefits M.Cost = extra cost of adding one unit such as sleeping
or getting one more cookie M. Benefit = extra benefit from adding one unit such as
sleeping or getting one more cookie Once the marginal costs outweigh the marginal
benefit, no more units can (or will) be added Example: 1 more cookie is o.k. b/c it is only 35 more
calories but once the unit cost (calories) exceeds what the benefit (satisfaction) is you will not add anymore.
Best example is how often you tell yourself you can “sleep just ____ much longer” before there is a cost you aren’t willing to put up with
COST/BENEFIT ANALYSIS
Read and answer figure 1.1 on making decisions at the margin Answer the 2 ?s
Decision making at the margin Like opportunity cost, thinking at the margin
applies to businesses/governments as well Employers think @ margin when they decide how
many workers to hire Legislators think @ margin when they decide how
much to increase govt. spending on a project
LESSON CLOSING
Trade-off worksheet Complete and have ready for tomorrow
Complete pg. 5: Chapter Essential ? “Scarcity, choices, and you!”
Video to watch while working Nature of Economics
SECTION 3 BELL WORK
Finish up Trade-off worksheet
Have Worksheet ready to go over
Start Nature of Economics: 1st 12:00
S3: PRODUCTION POSSIBILITIES CURVES
Guiding Question“How does a nation decide what/how
much to produce?” Write at top of S3 notes
Learning Objectives Interpret a PPC Explain how PPC’s show efficiency, growth, and
cost Why a country’s production possibilities depend
on its resources and technology Key Terms
http://www.pearsonsuccessnet.com/snpapp/iText/products/0-13-369833-5/Flash/Ch01/Econ_OnlineLectureNotes_ch1_s3.swf
HOW DOES A NATION DECIDE WHAT/HOW MUCH TO PRODUCE? PPC CURVES!!
To help decisions, economists use PPCs as a tool Curve helps nation’s economists determine alternative
ways of using a nation’s resources Production Possibilities
Economists use graphs to analyze choices/trade-offs that people make To draw PPC, begin by deciding which goods/services to
examine. Refer to graph, pg. 14
Production Possibilities Frontier Line that shows the maximum possible output an
economy can produce Each point reflects a trade-off
Happens b/c factors of production are scarce L, L, and C to make one product means fewer of those to
make the other
WHAT DO PPCS SHOW?
Efficiency PPF represents an economy working at its most efficient
level Economies can work inefficiently, using fewer resources
than capable. Underutilization
Growth When an economy grows the curve shifts to right
Production capacity can also decrease, leading to shift left
Cost: Can help show the opportunity costs of Decisions Cost increases as production shifts from making one item
to another Law of Increasing Costs: Refer to Chart pg. 17
Explains as we move along the curve, we trade off more & more for less & less output
TECHNOLOGY AND EDUCATION
Technology can increase a nation’s efficiency Govt.’s spend $$ investing in new tech.,
education and training for workforce
Go back and answer Chapter Essential ? How can we make the best economic choices
Finish up any openings up to page 10