ECONOMICS

WHAT DOES ECONOMICS MEAN TO ME?

Economics is the study of how people use their limited resources to satisfy their unlimited wants.

In other words, economics studies how people get what they want by using what they have.

DEFINE LIMITED RESOURCES AND UNLIMITED WANTS

Limited Resources Unlimited Wants

There are only a limited number of goods and services available at any one time.

What are your limited resources?

How do you use them?

People always want more!

Do all people want the same thing?

How do you use your resources to get what you want?

Do we ever stop wanting?

WHAT IS THE DIFFERENCE BETWEEN NEEDS AND WANTS?

Needs Wants

SCARCITY REFERS TO THE FACT THAT PEOPLE DO NOT HAVE ENOUGH RESOURCES TO SATISFY THEIR WANTS.

People’s wants are always greater than the

resources available!

What two conditions create scarcity?

SCARCITY AND CHOICE

OPPORTUNITY COSTS OF AN ECONOMIC DECISION REFER TO THE NEXT BEST CHOICE THAT WAS GIVEN UP BY THAT DECISION.

Example: If Jane has $1.00 and she has to choose between a pop and a bouncy ball and she chooses the pop than her opportunity cost is…….

DRAW YOUR OWN PICTURE OF SCARCITY

Scarcity is

HOW ARE SCARCE RESOURCES ALLOCATED ?

Cut the definitions into strips on and match them to the correct definition.

Command Price “First-come, first-served” Sharing Equally Rationing Lottery

ALLOCATION METHODSCheck your work, then paste.

Command-Government leaders decide who should get which resources.

Price - Producers state a price they are willing to sell their resources for and consumers decide whether or not to buy the resource at that price.

“First-come, first-served” - The seller offers the resource to customers in the order in which they appear, until the supply is used up.

Sharing Equally - Members of a group share their resources equally.

Rationing - During a shortage, a supplier or the government controls the amount of resources that can be used. Each user is allowed the same limited amount.

Lottery - People interested in the resource are assigned a number. Some numbers are selected by chance. Only those people selected may get or purchase the resource.

Which method is the best? Does it depend on the situation?

DAILY EXAMPLES OF ALLOCATION METHODS

Command- How parents give out allowance to their kids

Price-How most businesses and stores operate

“First-come, first-served” –How people usually get baseball or concert tickets

Sharing equally- How we are taught to share and divide up resources equally among our friends and family

Rationing- How your parents allow you to eat your Halloween candy, usually

Lottery- How a raffle works

EVERY SOCIETY HAS 3 BASIC ECONOMIC QUESTIONS IT MUST

ANSWER

What should be

produced?

How should it

be produced

?

Who should

get what is

produced?

Draw these three boxes in your flip book.

Which of these economic questions is answered by methods of allocation? Answer this question in your flip book.

GOODS AND SERVICES

Goods Services

Draw at least 2 examples of each.

CUSTOMER SERVICE

Customer Service is an organization’s ability to supply their customers wants and needs.

Write definition under pictures of goods and services.

RESOURCESMoney is not a resource!

MONEY IS THE PRODUCT OF RESOURCES NOT A RESOURCE!

Productive resources are also known at the “factors of production” and they are the ingredients that

go into making goods and services.

Productive resources include:•Human Resources•Natural Resources•Entrepreneurshipand•Capital Goods

PRODUCTION

Production -means the making of goods

Resource-a usable supply of energy or products

In economics, resources are the materials that go into making goods and services.

PRODUCTIVE RESOURCES :

Capital Goods -Machines, tools, computers, buildings and trucks are all capital goods when they are being used to produce other goods

Entrepreneurship-The different ingredients that go into making something must be organized

PROFIT AND LOSS

Profit-The positive gain from an investment or business operation after subtracting for all expenses

Loss- The negative loss from an investment or business operation after adding all expenses

Write these definitions into your study guide.

STRATEGIES FOR ORGANIZING PRODUCTION

There are many different ways, or strategies for organizing productive resources to make the production of goods and services more efficient.

What does production mean?

STRATEGIES FOR ORGANIZING PRODUCTION

Technology-The use of knowledge, skills and tools for making things. Technology applies human knowledge to production.

Why is this important?

A car manufacturer can produce many more cars and do it more efficiently by using the latest technology.

STRATEGIES FOR ORGANIZING PRODUCTION

Specialization-Producers only make a few goods or services and trade with others to satisfy wants.

Specialization allows a producer to be more efficient.

How?

SPECIALIZATION WHY IS IT IMPORTANT? 1. Specialization allows a producer to be

more efficient.

2. Job specialization allows people to make use of their best talents.

3. Some specialization may be based on natural resources.

Example: Northern Ohio

specializes in fishing

because it on Lake Erie.

STRATEGIES FOR ORGANIZING PRODUCTION

The division of labor breaks down jobs into a number of separate tasks, each performed by a different group or individual.

What is labor?

Labor is the work people do to make goods and services.

DIVISION OF LABOR

How is the division of labor important to producing goods and services?

The division of labor takes advantage of workers’ differing skills and talents.

Examples: Assembly line

MARKET ECONOMY The United States is a market economy.

In a market economy, producers and consumers decide how resources will be

used. A market economy is a place where people

exchange goods and services freely.

In a market economy, producers and consumers together determine what is made and who gets it.

THE EFFECTS OF COMPETITION

A producer is a person or business that supplies goods and services. Producers sell their goods and services in order to make a profit.Consumers are the people and businesses that buy and use goods and services.

Can you be a consumer and a producer?

COMPETITION

Competition among producers occurs when each producer wants to make sure that it can sell all of its products to consumers.

Producers try to:1. Sell their supply for the highest price

they can get2. Out-perform others by making the

best product

HOW DOES COMPETITION AFFECT CONSUMERS?

Producers want to sell all of their products to consumers.

In order to compete to sell products, producers will: 1. Lower their prices

2. Improve the quality of products

Competition = low price & high quality

IF PRODUCERS COMPETE, WHY DO PRICES GO UP? Sometimes there are so many consumers

who wish to purchase a product that there is not enough to go around. This means that the demand for the product is high.

Since consumers are willing to pay more for the product, producers know that they can increase the price.

If demand is low, producers may have to lower their price to attract customers.

SUPPLY AND DEMAND

The relationship between the supply of a product and the demand for a product helps to set the price in a competitive market.

High demand and low supply will increase the price of a product.

Low demand and high supply will lower the price of a product.

SPECIALIZATION

Specialization occurs when people produce fewer goods and services than they use.

Advantages: 1. Goods and services become cheaper to produce.By producing one good or service, a producer becomes more skilled and more efficient at making it. 2. Producers can make use of local advantages.

Regions specialize because of their natural resource advantages.

REGIONAL SPECIALIZATION

Region= any geographic area sharing common characteristics

Regions rarely produce everything they need. Instead, regions depend on one another for goods and services.

Regions are better off specializing- putting their money, resources and labor into making things they are most efficient at producing.

SPECIALIZATION

Imports- goods from foreign countries brought into a country for sale

Exports- goods and services sold from one country to other countries

INTERDEPENDENCE

Specialization leads to increased trade among regions and nations.

Because of specialization and trade, some regions become interdependent. They depend on each other for goods and services.

Regional specialization promotes trade.

THAT’S ALL……….FOR NOW