Module 1AEconomics and Choices

Economics – The study of how people choose to use scarce resources to satisfy their wants.

Module 1AEconomics and Choices

*8 Principles of Economic Thinking* Know them and be able to distinguish between them

1.Everything Has A Cost

2. People Choose For Good Reasons

Module 1AEconomics and Choices

3. Incentives Influence People’s Choices

4. Economic Systems Influence People’s Incentives and Choices

Module 1AEconomics and Choices

5. People Gain From Voluntary Trade

6. People’s Choices Influence The Value Of A Good Or Service

Module 1AEconomics and Choices

7. People’s Choices May Have Unintended Consequences

8. Choices Made Today Influence What Happens Tomorrow

Module 1AEconomics and Choices

Module 1AEconomics and Choices

Economize – People choose what they believe has the best combination of costs and benefits 

Module 1AEconomics and Choices

Goods – Things that you can buy (Typically things you can touch) – A computer.

Services – Work that you can buy (know how / knowledge, etc.) – Computer repairs.

Module 1BScarcity: The Basic Economic Problem

Scarcity – The lack of enough resources to satisfy wants. (limited resources & unlimited wants)

Module 1BScarcity: The Basic Economic Problem

Resources (Factors of Production)

Land

Labor

Capital

Entrepreneurship

Module 1BScarcity: The Basic Economic Problem

Opportunity Cost – The value of the next best alternative not chosen (What was given up).

Module 1C Economists and Their Tools

 

Macroeconomics - The study of the behavior of the economy as a whole (The big picture! Big Mac!)

Microeconomics – The study of specific factors of the economy (The little picture Microscopic)

Module 1C Economists and Their Tools

Positive Economics – The way things are. Questions of fact, not value. Example - The unemployment rate is 5.5%.

Normative Economics – The way things ought to be. Questions based on values and beliefs. Example – I think minimum wage should be $10.00 an hour.

Module 1C Economists and Their Tools

Economic model – A simplified representation of a complex activity, system, or problem.

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Module 1DScarcity, Choices, and Opportunity Costs

 

Production Possibilities Curve (PPC) A model used by economists to illustrate scarcity on an economy. PPC Assumptions:

- Resources are fixed- All resources are fully employed- Only 2 things can be produced- Technology is fixed

Module 1DScarcity, Choices, and Opportunity Costs

Trucks vs’ TV’s (Page 14 & 15) PPC’s show:

-How scarcity affects production possibilities

-Trade-off among choices

- Opportunity cost of choices

PRODUCTION POSSIBILITIES- Create a new and unique Production Possibilities chart similar to the chart on Activity Sheet 1.5.

- Graph the data from your chart.

- Develop 3 questions related to your data (See Activity sheet 1.5 for ideas)

* correctly answer your questions!