Unit 1 Economics:There Is No Such Thing As A Free

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Unit 1 Economics:There Is No Such Thing As A Free

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Learning TargetsLearning Targets

I will define scarcity, allocate, and resource.

I will explain how scarcity applies to real life.

I will examine the ways resources can be allocated.

I will define scarcity, allocate, and resource.

I will explain how scarcity applies to real life.

I will examine the ways resources can be allocated.

DefinitionsDefinitions

Scarcity = Not enough of a resource to satisfy everyone’s wants at all times.

Scarcity = Not enough of a resource to satisfy everyone’s wants at all times.

DefinitionsDefinitions

Allocation = To distribute something

Resource = any useful thing, person, or idea that can be used

Allocation = To distribute something

Resource = any useful thing, person, or idea that can be used

How can we allocate resources?

How can we allocate resources?

Randomly / Luck Speed (first come, first

served) Age, gender, or physical

ability Wealth / social class Connections / nepotism Need

Randomly / Luck Speed (first come, first

served) Age, gender, or physical

ability Wealth / social class Connections / nepotism Need

Who allocates resources in our country?

Who allocates resources in our country?

People Businesses The government

People Businesses The government

Closing: Exit Ticket 8/2/2012

Closing: Exit Ticket 8/2/2012

1. List examples of resources.

2. Explain what scarcity means.

3. List ways we can allocate resources in any economy.

1. List examples of resources.

2. Explain what scarcity means.

3. List ways we can allocate resources in any economy.

Economics is:Economics is: The study of how people

respond to scarcity.

Scarcity = unlimited wants + limited resources

The study of how people respond to scarcity.

Scarcity = unlimited wants + limited resources

Scarcity is more than “not enough”.

Scarcity is more than “not enough”.

EVERY resource desired is scarce because it can be used another way.

Ask yourself to know if something is scarce:

a. Is it a resource?b. Do people pay for it?c. Can it be used another way?

EVERY resource desired is scarce because it can be used another way.

Ask yourself to know if something is scarce:

a. Is it a resource?b. Do people pay for it?c. Can it be used another way?

Are these resources scarce?

Are these resources scarce?

Fresh water Wool Petroleum (oil) Workers Leather Plastic Diamonds Wood

Fresh water Wool Petroleum (oil) Workers Leather Plastic Diamonds Wood

But THESE are NOT Scarce

But THESE are NOT Scarce

Salt water Oxygen (typically) Sunshine Hepatitis TrashMoney is NOT a resource!

Salt water Oxygen (typically) Sunshine Hepatitis TrashMoney is NOT a resource!

The 7 basic ideas you should know to think like

an economist

The 7 basic ideas you should know to think like

an economist1. People make decisions,

and they choose for good reasons.

2. Everything has a cost. Time is a cost to most decisions.

1. People make decisions, and they choose for good reasons.

2. Everything has a cost. Time is a cost to most decisions.

3. Incentives matter. You can predict people’s decisions based on their incentives.

4. People create rules and systems to control other people’s decisions.

3. Incentives matter. You can predict people’s decisions based on their incentives.

4. People create rules and systems to control other people’s decisions.

5. People gain from voluntary trade.

6. People set the cost of goods and services through their choices.

7. Every action has a result.

5. People gain from voluntary trade.

6. People set the cost of goods and services through their choices.

7. Every action has a result.

Principles (reminder):Principles (reminder):

1. People have reasons for choices.

2. Everything costs something.3. Incentives predict actions.4. Societies have rules.5. Trade is win-win.6. People affect prices.7. Actions have consequences.

1. People have reasons for choices.

2. Everything costs something.3. Incentives predict actions.4. Societies have rules.5. Trade is win-win.6. People affect prices.7. Actions have consequences.

Opening 8/6/2012:Opening 8/6/2012:

What are the 3 things that must be true for a resource to be scarce – the 3 questions to ask?

Is paper scarce? Why or why not?

Is chocolate scarce? Why or why not?

Is garbage scarce? Why or why not?

What are the 3 things that must be true for a resource to be scarce – the 3 questions to ask?

Is paper scarce? Why or why not?

Is chocolate scarce? Why or why not?

Is garbage scarce? Why or why not?

Learning Targets:Learning Targets:

I will be able to define opportunity cost and trade-off.

I will be able to evaluate different options for decisions.

I will be able to define opportunity cost and trade-off.

I will be able to evaluate different options for decisions.

Trade-offsTrade-offs Every choice has a cost, or trade-offs.

Trade-offs: everything given up when a choice is made.

Examples: Choose water and give up

Powerade and Coke. Choose to be a doctor and

give up being a lawyer and a sports analyst.

Every choice has a cost, or trade-offs.

Trade-offs: everything given up when a choice is made.

Examples: Choose water and give up

Powerade and Coke. Choose to be a doctor and

give up being a lawyer and a sports analyst.

Opportunity Cost: There’s Only One!

Opportunity Cost: There’s Only One!

The 1 BEST trade-off= opportunity cost.

Opportunity cost is your second choice.

Which of the 7 economic ways of thinking is this???

The 1 BEST trade-off= opportunity cost.

Opportunity cost is your second choice.

Which of the 7 economic ways of thinking is this???

Example: Chris decides to go to college

for 4 years on a partial scholarship.

What are his trade-offs? Work experience for 4 years Lost income for 4 years Tuition cost for 4 years Studying instead of partying Give up car to live on campus Give up great girlfriend b/c he

moved away Chris’s opportunity cost:

(personal to him) Only ONE of these

Example: Chris decides to go to college

for 4 years on a partial scholarship.

What are his trade-offs? Work experience for 4 years Lost income for 4 years Tuition cost for 4 years Studying instead of partying Give up car to live on campus Give up great girlfriend b/c he

moved away Chris’s opportunity cost:

(personal to him) Only ONE of these

Maggie has overbooked her Saturday. She is supposed to: Go to a wedding Meet her boyfriend’s parents Go on a job interview Clean her apartment Babysit her sister’s kids Renew her driver’s license at the

DMV She decided to babysit. How many trade-offs are listed? How many opportunity costs are

listed?

Maggie has overbooked her Saturday. She is supposed to: Go to a wedding Meet her boyfriend’s parents Go on a job interview Clean her apartment Babysit her sister’s kids Renew her driver’s license at the

DMV She decided to babysit. How many trade-offs are listed? How many opportunity costs are

listed?

Practice:Practice: I am trying to decide what to spend

my last $100 of my paycheck. Options:

Pay down credit card debt Go out partying Buy new clothes Save it for an emergency Buy my mom a really nice bday present

I decided to go out partying. What are my trade-offs? What is my opportunity cost?

I am trying to decide what to spend my last $100 of my paycheck.

Options: Pay down credit card debt Go out partying Buy new clothes Save it for an emergency Buy my mom a really nice bday present

I decided to go out partying. What are my trade-offs? What is my opportunity cost?

Work:Work:

We are going to do two of your first homework terms together right now.

It is always vocab terms. Homework is due every

Friday. You must hand-write your

answers.

We are going to do two of your first homework terms together right now.

It is always vocab terms. Homework is due every

Friday. You must hand-write your

answers.

Homework Term #1: Scarcity.

Homework Term #1: Scarcity.

Definition: anything desirable and limited. Almost everything is limited because there are always other uses for resources. AND

Example: Oprah even deals with scarcity because she has limited time. OR

Pictogram: see board. OR Circle or Bubble Map

Definition: anything desirable and limited. Almost everything is limited because there are always other uses for resources. AND

Example: Oprah even deals with scarcity because she has limited time. OR

Pictogram: see board. OR Circle or Bubble Map

Homework Term #2: Allocate

Homework Term #2: Allocate

Definition: To give or pass something out.

Example: My boss allocated the bathroom cleaning duty to me.

OR Pictogram: see board. OR Circle or Bubble Map

Definition: To give or pass something out.

Example: My boss allocated the bathroom cleaning duty to me.

OR Pictogram: see board. OR Circle or Bubble Map

Learning TargetsLearning Targets

I will use cost-benefit analysis to evaluate decision.

I will define economic utility & rational decision-making.

I will use cost-benefit analysis to evaluate decision.

I will define economic utility & rational decision-making.

How do know if a decision is right for you?

How do know if a decision is right for you?

Cost-benefit analysis is a way of making a decision. Some things about the

future are unknowable (the unintended consequences).

BUT, with the information known, make the best decision!

Cost-benefit analysis is a way of making a decision. Some things about the

future are unknowable (the unintended consequences).

BUT, with the information known, make the best decision!

Costs of actions = trade-offs

Cost of buying Chick-fil-a this am:

$3 I spent150 extra calories I ate10 minutes out of way to

workNo room in belly for banana

muffin I bakedGuilt over eating chicken

(since I’m a vegetarian)

Costs of actions = trade-offs

Cost of buying Chick-fil-a this am:

$3 I spent150 extra calories I ate10 minutes out of way to

workNo room in belly for banana

muffin I bakedGuilt over eating chicken

(since I’m a vegetarian)

Benefits of action = good effects

Benefits of buying Chick-fil-a this am:

10 grams extra proteinHappiness of yummy food

Happiness & usefulness of something = economic utility

The Chick-fil-a biscuit increased my economic utility, or made me happier.

Helped local economy through purchase

Benefits of action = good effects

Benefits of buying Chick-fil-a this am:

10 grams extra proteinHappiness of yummy food

Happiness & usefulness of something = economic utility

The Chick-fil-a biscuit increased my economic utility, or made me happier.

Helped local economy through purchase

Charting Cost-Benefit Analysis

Charting Cost-Benefit Analysis

Benefits of Graduating High School

Costs of Graduating High School

Pride Missed income from working while in school

Better job than no diploma

Dealing with rules

Cost-benefit analysis = a better decision.

Cost-benefit analysis = a better decision.

Rational decisions are when you systematically think of costs and benefits.

Only take the action if the benefits outweigh the costs.

Rational decisions happen when you use cost-benefit analysis.

Rational decisions are when you systematically think of costs and benefits.

Only take the action if the benefits outweigh the costs.

Rational decisions happen when you use cost-benefit analysis.

Rational Decision: I’m NOT going to rob a bank.

Rational Decision: I’m NOT going to rob a bank.

Benefits of robbing bank Costs of robbing bank

Lots of money in short time Have to protect money – can’t put in bank

Risk of being caught is high – then jail and maybe prison

Learning Targets:Learning Targets:

Define and give examples of Factors of Production.

Explain how Division of Labor affects work pace.

Define and give examples of Factors of Production.

Explain how Division of Labor affects work pace.

Factors of Production = Productive Resources.

Factors of Production = Productive Resources.

FOP FOP = every kind of

resource in the world 4 categories of FOPs: Land Labor Capital Entrepreneurs

FOP FOP = every kind of

resource in the world 4 categories of FOPs: Land Labor Capital Entrepreneurs

Land = gifts of natureLand = gifts of nature

Natural resources given by the earth.

Animals are also land. Examples: Dirt, wood,

water, oil, horses

Natural resources given by the earth.

Animals are also land. Examples: Dirt, wood,

water, oil, horses

Labor = workersLabor = workers

Any person paid to do a job is a laborer.

Laborers are often told what to do by entrepreneurs.

Examples: teachers, bankers, pro athletes, President Obama

Any person paid to do a job is a laborer.

Laborers are often told what to do by entrepreneurs.

Examples: teachers, bankers, pro athletes, President Obama

Capital = tools & machines

Capital = tools & machines

Capital is man-made and helps get jobs done.

Capital can be simple (pencils) or complex (airplanes).

Examples: desks, computers, cars, glasses, hammers

Capital is man-made and helps get jobs done.

Capital can be simple (pencils) or complex (airplanes).

Examples: desks, computers, cars, glasses, hammers

Entrepreneurs = business owners

Entrepreneurs = business owners

The brains of a business The risk-takers The boss of laborers Examples: Bill Gates, Tyler

Perry, Oprah, Steve Jobs, Beyonce, Justin Bieber

The brains of a business The risk-takers The boss of laborers Examples: Bill Gates, Tyler

Perry, Oprah, Steve Jobs, Beyonce, Justin Bieber

All FOPs are needed for every business.

All FOPs are needed for every business.

All goods and services sold require at least 1 of each FOP.

Example: Babysitting business Entrepreneur: founder Land: home to watch kids Labor: babysitter Capital: crayons

All goods and services sold require at least 1 of each FOP.

Example: Babysitting business Entrepreneur: founder Land: home to watch kids Labor: babysitter Capital: crayons

Practice:Practice:

Create your own example – use 1 of each FOP for a construction company.

Create your own example – use 1 of each FOP for a construction company.

Division of LaborDivision of Labor

Splitting up work between people to get it done faster

Like an assembly line Each person does the same

task repeatedly & gets faster

No transition times to move around – stay in same place

Splitting up work between people to get it done faster

Like an assembly line Each person does the same

task repeatedly & gets faster

No transition times to move around – stay in same place

Practice:Practice:

Explain how division of labor makes a football team or a school better.

Explain how division of labor makes a football team or a school better.

FOP collage assignmentFOP collage assignment

 You will fill the outline of a person with pictures from magazines. The pictures should be glued in the general shape of a human body. The pictures should cover the outline of the person collage-style. Follow the order below.

 You will fill the outline of a person with pictures from magazines. The pictures should be glued in the general shape of a human body. The pictures should cover the outline of the person collage-style. Follow the order below.

Head: The brains of all Factors of Production are the entrepreneurs. Make sure your entrepreneur(s) owns a business and is not just a worker. Label on the side what business each entrepreneur owns and who she/he is. Glue a picture of an entrepreneur as the head.

Arms: Your arms and hands vary from technical to physical work and so can your representative laborers. As long as people are working, they count as laborers. Glue pictures of laborers for the arms.

Head: The brains of all Factors of Production are the entrepreneurs. Make sure your entrepreneur(s) owns a business and is not just a worker. Label on the side what business each entrepreneur owns and who she/he is. Glue a picture of an entrepreneur as the head.

Arms: Your arms and hands vary from technical to physical work and so can your representative laborers. As long as people are working, they count as laborers. Glue pictures of laborers for the arms.

Torso: Your torso contains all your essential organs beyond the brain, and so too are land resources essential to the function of all other productive resources. Remember that natural resources include animals. Glue pictures of land resources for the torso.

Legs: Your legs and feet are what make you mobile just like capital resources move your work along. Any tools, machines, and man-made objects count as capital. Glue pictures of capital for the legs.

Torso: Your torso contains all your essential organs beyond the brain, and so too are land resources essential to the function of all other productive resources. Remember that natural resources include animals. Glue pictures of land resources for the torso.

Legs: Your legs and feet are what make you mobile just like capital resources move your work along. Any tools, machines, and man-made objects count as capital. Glue pictures of capital for the legs.

Written individual assignment:   In a short paragraph, describe a

business (real or imaginary) that could use one picture from each category on your collage.  

For example: (If there was a picture of a tree for a land resource on my collage)

My entrepreneur is ____________ and s/he started a ________ business. S/he could use trees for wood to make an office.

Written individual assignment:   In a short paragraph, describe a

business (real or imaginary) that could use one picture from each category on your collage.  

For example: (If there was a picture of a tree for a land resource on my collage)

My entrepreneur is ____________ and s/he started a ________ business. S/he could use trees for wood to make an office.

Debrief:Debrief: What helped some groups

work faster than others? What FoPs did you use to

complete this assignment? What are some of the

problems of division of labor? How do businesses solve

problems of division of labor?

What helped some groups work faster than others?

What FoPs did you use to complete this assignment?

What are some of the problems of division of labor?

How do businesses solve problems of division of labor?

Finish Work from Tuesday:

Finish Work from Tuesday: Select one of the articles: “Boy Scouts

Decision”, “Drug Laws”, or “Organ Donation”.

Summarize in 1-3 sentences what the central decision is in the article.

Create a cost-benefit chart for what YOU would do in that situation. Think of at least 3 costs and 3 benefits.

State in 1-3 sentences what decision you reached.

Select one of the articles: “Boy Scouts Decision”, “Drug Laws”, or “Organ Donation”.

Summarize in 1-3 sentences what the central decision is in the article.

Create a cost-benefit chart for what YOU would do in that situation. Think of at least 3 costs and 3 benefits.

State in 1-3 sentences what decision you reached.