Choices, Choices, Choices, . . .Choices, Choices, Choices, . . .

Concept(S):Scarcity, Opportunity Cost, & Trade OffsSkills: Decision Making

Looking at the importance of choice Introduction to three major concepts of

economics:1. Scarcity2. Trade offs3. Opportunity CostYou’ll reflect on all this by end of period with

some questions to consider

What you’ll be doing today…

Your professor first semester in college is

describing her policy on late work. She says you can turn in late work even after the deadline. But, if you turn the assignment in on time, and you don’t like the grade, you can re-submit it for review for a higher grade. If you turn in the work after deadline, and you don’t like the grade you cannot get it reviewed for higher grade.

Would you turn in your work on time? Or submit your work after the deadlines? Explain your thought process

Preamble

Instructions: With a partner, walk around and look at all the items posted on the wall –For every pair of items you see- Answer this question:

“Which do you prefer and why?”Explain to your Jedi partner your reasons for your preference- Jedis you speak firstYou will have 1 min each to discuss with your partner

Choices!

Discussion Questions:What do you gain from your choice?What do you lose from your choice?

Why is choice so important in our daily lives?

Debrief…

Part 1: The

Basics

Economics – the study of how individuals and

societies make decisions about ways to use scarce resources to fulfill wants and needs.

What does THAT mean?!!??!!

WHAT IS ECONOMICS???

Macroeconomics The big picture:

growth, employment, etc.

Choices made by large groups (like countries)

Microeconomics How do individuals

make economic decisions

The Study of Economics

ALL Societies (we) must figure out

WHAT to produce (make) HOW MUCH to produce (quantity) HOW to Produce it (manufacture) FOR WHOM to Produce (who gets what) WHO gets to make these decisions?

ECONOMICS: 5 Economic Questions

Definition: The items used to make other

goods (products)

What are resources?

BUT, there’s a Fundamental Problem:

SCARCITY: unlimited wants and needs but limited resources

Choices, Choices

Because ALL resources, goods, and services are limited – WE MUST MAKE CHOICES!!!!

We make choices about how we spend our money, time, and energy so we can fulfill our NEEDS and WANTS.

What are NEEDS and WANTS?

Why Choices?

NEEDS – “stuff” we must have to survive,

generally: food, shelter, water,

WANTS – “stuff” we would really like to have (Fancy food, shelter, clothing, big screen TVs, jewelry, conveniences . . . Also known as LUXURIES

Wants and Needs, Needs and Wants

VS.

You can’t have it all (SCARCITY –

remember?) so you have to choose how to spend your money, time, and energy.

These decisions involve picking one thing over all the other

possibilities – a TRADE-OFF!

TRADE-OFFS

Trade-Offs, cont. Chew on This!: What COULD you have

done instead of coming to school today?

These are all Trade-Offs!

A special kind of Trade-Off is an

OPPORTUNITY COST =

The Value of the Next Best Choice

(Ex: Sleeping is the opportunity cost of studying for a test)

Opportunity Costs

I have $12 in my pocket I have $12 in my pocket

Then, what happens to the movies…If I buy a pizza…

Q: What is the opportunity cost of buying pizza?

Several students were talking about taking time off after graduating high school so they could spend two years traveling around the world. One student remarked, “It’s a great idea, but can you imagine how much it would cost? Even if you backpacked and camped out, it would still cost you $10,000!” An economics student replied that the sum of money would not amount to even half the cost. Explain what the economics student is talking about.

*Hint- Review the concepts of scarcity, trade offs, & opportunity cost to respond to this scenario.

What are the students gaining? What are they losing? What are the alternatives (other options)

*Be sure to also underline or highlight the scarce resources, tradeoffs and/or opportunity cost

Practice

Discuss the concept of Outsourcing Introduce the concept of Factors of Production Look at some news coverage and a TV show

called 30 days about the pros and cons of Outsourcing

Our Plan for the day…

Preamble•We are going to watch a promotional video from the garment manufacturing and retail company American Apparel•Things to watch for:1.What makes AA different than other clothing companies?2.Why do you think they have become so popular?

American Apparel Sewing5th Floor AA Sewing

MADE IN THE USA!

Listing ALL FOUR Factors of Production Explain the process of production identifying

all the components (pieces of production)

Wrap Up For the Day Will Be…

Production So how do we get

all this “stuff” that we have to decide about?Decisions, decisions …

PRODUCTION, cont.

Production is how much stuff an individual, business, country, even the WORLD makes.

But what is “STUFF”?

STUFF – Goods and Services.

Goods – tangible (you can touch it) products we can buy

Services – work that is performed for others

Goods & Services

Goods Services

Factors of Production So, what do we need to make all of this

Stuff?

4 Factors of Production

LAND

Water, natural gas, oil, trees (all the stuff we find on, in, and under the land

LABOR

Physical and Intellectual

Labor is human power

4 Factors of Production

CAPITAL

- Tools, Machinery, Factories

Human capital is brainpower, ideas, innovation

ENTREPRENEURS

Investment $$$ The risks of investing

Which Factor of Production is it?

Which Factor of Production is it?

Which Factor of Production is it?

Which Factor of production is it?

Factors of Production – what we need to make goods and services

Producer – company that makes goods and/or delivers services

Consumer – people who buy goods and services (formerly known as “stuff”)

THREE parts to the Production Process

What’s the relationship like?

Production Process

Capital

Labor

Land

Entrepreneurship

Production/Manufacturing“Factory”

Goods

Services

Consumers

Capital Goods & Consumer Goods

Capital Goods: are used to make other goods

Consumer Goods: final products that are purchased directly by the consumer

CHANGES IN PRODUCTION

Division of Labor – different people perform different jobs to achieve greater efficiency (assembly line).

You do your job, and I will

do my Job and we will be more

EFFICIENT

CHANGES IN PRODUCTION Consumption – how

much we buy (Consumer Sovereignty [control])The DELL store is empty because….

Everyone is at the APPLE STORE!!!

Can you identify what problem Dell has in this scenario?

With your jedi partner, take 3 mins to

brainstorm what options does Dell have if the Apple store is as full as seen in the pic before

Let’s bring these out to the floor…Dell can do what lots of American companies have

been doing for quite some time… Outsourcing- The practice of companies sending production to

other countries where materials and labor are cheaper = this reduces costs for companies = can charge less for goods/services… = what choices will consumer make?

Choices that Dell has to make

What outsourcing looks like in

21st centuryCarrier-An American AC/Heater company

Indian manufacturing workers

We Will be watching an episode of the TV

show 30 days by Morgan Spurlock (Supersize Me)

Pay attention to the choices that tech companies have made

How do these choices impact American workers? Indian workers?

What are the trade offs and opportunity costs of outsourcing?

Is outsourcing good or bad for Americans?

Practice with Factors of Production

LandOpen field of grass where the cows graze

Labor-Farmer who milks cows

-Cheese maker

-Packaging

-Delivery

Capital-Milking tools

-Farm

-Containers, etc.

Entr. -Money

-Ideas

-Experience on cow farming and cheese making

List & Describe ALL FOUR Factors of Production Explain the process of production identifying

all the components (pieces of production)(The Three parts of production & the visual) Do you agree or disagree with the practice of

outsourcing? Explain your rationale- Identify and discuss the trade offs and opportunity costs of Outsourcing

Wrap Up For the Day!

Define Scarcity & provide examples Define Trade Offs & provide examples Define Opp Cost & provide examples Explain why and how choice is impacted by all

THREE above List ALL four Factors of Production with example

for each Explain the production process (the diagram) with

the THREE components Discuss how outsourcing works, the trade offs,

and opportunity costs of this business practice

Can you do the following?...