Here are my few, simple classroom rules. Know

them and abide by them. 1. Be in the classroom,

seated, prepared to work (with all necessary materials ready) on time.

2. Keep your area clean and remove any trash you might accumulate at the end of class.

3. Respect others including using appropriate language at all times.

4. Properly care for textbooks, desks and other classroom equipment and furniture (NO WRITING ON DESKS OR IN BOOKS)

5. Abide by all OHS rules, particularly: no hats, CD players, cell phones, pagers, radios, games or other electronic devices during class.

Obey the rules avoid the curse

Consequences: See rules sheet

Extraordinarily bad students receive the Simoncini curse:

Girls: look like this by age 19

Boys: marry a woman who looks like this

Extensive reading and answering of several discussion questions nightly;occasional reading quizzes.

Graded participation Weekly in-class writing assessments and bi-weekly vocabulary assignments Tests every two weeks—similar to the AP exam

And once we begin our

study of the U. S. government in October we

shall also spend each

Friday’s class engaged in a discussion of

current events and politics in

general.

On this hot afternoon, I don’t want to make you strain too much

but I do have a homework

assignment for you. Read Chapter 1 of the economics book and do the questions on

the website.

Objectives:1. Define economics2. Identify the factors of producton3. Determine the goal of

entrepreneurship4. Determine why scarcity is a basic

problem of economics5. Identify the issues that producers must

address to distribute resources 6. Explain why producers study

productivity

12.1: Students understand common economic terms and concepts and economic reasoning

Adam Smith

Professor Pete here. Being that all of you are seniors, let’s begin our study of economics by taking

a look at the different college courses you can take under the heading of “Economics.” Here are the offerings of my alma

mater, the University of San Francisco.

Before going on, let’s briefly discuss class methods and note

taking.Prepare all questions on the sheet provided on the website.

Augment your answers with information from the notes: red: very important—should take down; blue: mostly additional information or examples; green: things previously studied or in homework.

Microeconomics: choices made by economic actors (households, companies, individual markets).Macroeconomics: behavior of entire economies(unemployment in the U. S.)

Factors of Production:Natural resources

Factors of Production:Human resources

Factors of Production: Capital resources

Factors of Production:Entrepreneurship

ScarcityScarcity: the most basic problem of economics because it forces people tomake decisions about how to use resources effectively.Water usage in California

Three Basic Economic QuestionsWhat to produce? How to produce?For whom to produce?

Scarcity

Unlimited

Needs &Wants

Limited Resource

s

Choices

WHATTo

produce

HOWTo

produce

FOR WHOM

Toproduce

Trade-offs and opportunity costs

Trade-off: if a resource is used to produce or consume one good, that same resource cannot be used to produce or consume something else.Opportunity cost: value of next best alternative given up to purchase preferred item.

Chev. Aveo(in millions)

Chev. Impala(in millions)

9

8

7

6

5

4

3

2

1

01 2 3 4 5 6

E

D

C

B

A

G

F

Chevrolet production options if it concentrated its current resources on producing only Aveos and ImpalasAssumption: resources will not change and those resources will be used efficiently

Opportunity costs

Chev. Aveo(in millions)

Chev. Impala(in millions)

9

8

7

6

5

4

3

2

1

01 2 3 4 5 6

E

Z

YA

What does the curve’s shift to the right indicate?Improvements in technology ornew resourcesare available.

Functions of moneyA standardized item that is generally traded for goods or servicesA measure of value that allows both producers and consumers to determine and express worthA store of value that can be saved and used to purchase items at a later date

Self-sufficiency vs. Interdependence

Self-sufficiency: societies can fulfill all of their needs without outside assistance

Interdependence: events or developments in one region of the world or sector ofthe economy influence eventsor developments in otherregions or sectors

Break into your larger groups. Plan the creation of an industrial or agricultural business that produces some tangible commodity. The commodity must have two variations (i.e. luxury vs. economy cars). Discuss whyyou selected the commodity in terms of the 3basic economic questions and in terms of the 4factors of production. Create a production possibilities curve for your commodity.

It’s time for a group activity to reinforce what we have learned

thus far.

Oh boy! Another day of fun and games

learning economics.

Objectives:1. Describe the types of mixed economies

that exist today2. Explain the basic principles of free

enterprise in the United States3. Name the two markets of the circular

flow model and explain how the circular flow model reflects change

4. List and define the major goals of U. S. economic policy

12.2: Students analyze the elements of America’s market economy in a global setting

Traditional, Command and Market EconomiesTraditional: a society’s values, customs and traditions—rituals, habits, laws and religious beliefs.

Kaiowa tribe, near Paraguay-Brazil border

Traditional, Command and Market EconomiesCommand economies rely on government officials to answer the three basic economic questions. Individuals have little or no say in economic choices.

Traditional, Command and Market EconomiesMarket economies: individuals answer the three basic economic questions. The government has no say in what, how and for whom goods are produced and the factors of production are owned by individuals.Mixed: pure systems do not exist in the world today.

When the government is not involved in the economy, the market is driven purely by self-interest—the impulse that encourages people to fulfill their needs and wantsSelf-interest benefits all of society by helping the economy grow (John Nash’s Equilibrium)Government involvement in the economy conflicts with self-interest and limits markets

Adam Smith (1723-1790)An Inquiry into the Nature and Causes of the Wealth of Nations

Mixed economiesAuthoritarian socialism (Communism)—the government owns or controls nearly all the factors of production.

Mixed economiesCapitalism—closest to the market modelIndividuals can own the factors of production and answer the basic economic questionsThe government can enact some regulations, but its involvement in the economy is relatively limited

Mixed economiesDemocratic socialism—the government owns some of the factors of production; but government ownership is generally limited to key industries such as public utilities and phone networks

Five Features of the U. S. Free-Enterprise Syst.Individuals have the right to:Own private property and enter into contractsMake individual choicesEngage in economic competitionMake decisions based on self-interestParticipate in the economy with limited government involvement and regulation

Households(Individuals)

Businesses

GovernmentM

oney payments (taxes)

Services

Resources (labor)

Money payments (income)

Mon

ey p

aym

ents

Reso

urce

s (la

bor)

Resource market

Mon

ey p

aym

ents

(tax

es)

Money paym

ents

Money payments

Serv

ices

Products

Products

Product market

Six Major Goals of American Economic Policy FreedomEconomic EfficiencyEconomic EquityEconomic Security Economic StabilityEconomic Growth

Six Major Goals of American Economic Policy Economic Efficiency

One measure is gross domestic product—the total value of all final goods and services produced within a country in a given year.

Economic EquityMilton Freidman (Free to

Choose: A Personal Statement (1980)): Economic freedom promotes economic equity. “A society that puts equality—in the senseof equality of outcome—ahead of freedom will end up with neither equality nor freedom…On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality…”

Six Major Goals of American Economic Policy

Economic SecurityExample: Federal Deposit Insurance

Corporation—since 1933 has insured individual bank accounts (today up to $250,000)

Six Major Goals of American Economic Policy

Economic StabilityExample: Price stability—the prices of

all products taken together—not to changes in the price of an individual product, often indicated in the Consumer Price Index

Six Major Goals of American Economic Policy

Why are scarcity and choice basic problems in economicsScarcity forces individuals, businesses, and governments to prioritize and make choicesNot all needs and desires can be metChoice is a basic economic problem because not all available choices can be selected

How are economic growth, stability and security measured?Growth: changes in standard of livingStability: employment rates and price fluctuationsSecurity: a nation’s poverty level, the number of failed businesses and banks, and by the number of emergencies that might harm the national economy

Consider the new sports complex for baseball, softball and soccer. Up until a few years ago that entire area was a large neighborhood with several single family homes. When the school said it needed that area for a sports complex, the government agency known as the Oakdale Joint Unified School District invoked the legal concept of eminent domain and people were required to lose their homes. They were reimbursed, however, at fair market prices. Do you believe that the concept of eminent domain is a fair practice?

Take a moment and read “In the News” on p. 41.

Break into small groups. Create a case study—real or made up—about a business following the five features of the U. S. free enterprise system. Then apply your case study to the Circular Flow of Goods and Services chart on p. 34. Be prepared to discuss with the class.

It’s time for a group activity to reinforce what we have learned

thus far.