Chapter 1 What is Economics Sec 1 Scarcity

Warm up • The country is in an economic crisis in what 3 ways

Scarcity and the Factors of Production • What is economics? • How do economists

What Is Economics? • Economics is the study of how people make choices to

Scarcity • Scarcity occurs when there are limited quantities of resources to meet unlimited

Shortages • Shortages occur when producers will not or cannot offer goods or services

The Factors of Production • Land All natural resources that are used to produce

The Factors of a Surf Board Manufacturer Land Labor Capital Foam Blank The human

Section 1 Assessment 1. What is the difference between a shortage and scarcity? (a)

Homework Questions • Page 6 • 1 • 2 • 3 • 4 •

Section 1 Assessment Page 6 • Key Terms and Main Ideas #1 #6 •

Chapter 1 section 2: Opportunity Cost • Name: ____ • Date: _____ Select &

Warm up • List 5 appealing vacation destinations: • 1) • 2) • 3)

Opportunity Cost • Does every decision you make involve trade-offs? • How can a

Trade-offs and Opportunity Cost • Trade-offs are all the alternatives that we give up

The Decision-Making Grid • Economists encourage us to consider the benefits and costs of

Create Your Own Decision Making Grid • ______ Decision Making Grid • Benefits _______

Thinking at the Margin • When you decide how much more or less to

Section 2 Assessment 1. Opportunity cost is (a) any alternative we sacrifice when we

Section 2 Assessment Page 11 • Key Terms and Main Ideas: • #2 •

Ch 1 Section 3 Production Possibilities Curves • Name: _______ • Date: _____ •

Warm up • Why do graphs show information more clearly than text? (Please answer

Production Possibilities Graphs • What is a production possibilities graph? • How do production

Production Possibilities • A production possibilities graph shows alternative ways that an economy can

Efficiency Chapter 1 Section Production Possibilities Graph 25 Shoes (millions of pairs) • Efficiency

Growth Production Possibilities Graph 25 Future production Possibilities frontier T Shoes (millions of pairs)

Cost • Cost A production possibilities graph shows the cost of producing more of

Section 3 Assessment 1. A production possibilities frontier shows (a) farm goods and factory

Section 3 Assessment (page 18) • Key Terms and Main Ideas • # 1.

Sec. 3 Guided Reading and Review Production Possibilities Curves • 1. Horizontal and vertical

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Chapter 1 “What is Economics? ” Sec 1 “Scarcity and the Factors of Production” • Name: _____ • Date: _____ • What comes to mind when you think of the word scarce? ? ? • Name two items that might be scarce • 1 • Key Terms Page 3 • 2 • Select & Define 4 Key Terms 1) What resources are scarce in your everyday life. 2) 1 3) 2 4) Chapter 1 Section Main Menu

Warm up • The country is in an economic crisis in what 3 ways has this economic crisis effected you and your family and how? 1) 2) 3) Chapter 1 Section Main Menu

Scarcity and the Factors of Production • What is economics? • How do economists define scarcity? • What are three factors of production? Chapter 1 Section Main Menu

What Is Economics? • Economics is the study of how people make choices to satisfy their wants • For example: – You must choose how to spend your time – Businesses must choose how many people to hire – What are some examples that relate to the current economic crisis? Chapter 1 Section Main Menu

Scarcity • Scarcity occurs when there are limited quantities of resources to meet unlimited needs or desires • Something is considered scarce when its availability is not enough to meet demand. Examples • Water • Time during finals • ? ? ? Chapter 1 Section Main Menu

Shortages • Shortages occur when producers will not or cannot offer goods or services at current prices • It is related to price! If the price is too low there will be a shortage. Why? • Difference between the demand for a product or service and the amount supplied in a market. • Examples – 1973 Oil Crisis – ? ? ? Chapter 1 Section Main Menu

The Factors of Production • Land All natural resources that are used to produce goods and services. STUFF FOUND IN NATURE! • Labor Any effort a person devotes to a task for which that person is paid. • Capital Any human-made resource that is used to create other goods and services. – Physical Capital: Special Machines, Buildings – Human Capital: “Brain stuff” Knowledge/Experience Chapter 1 Section Main Menu

The Factors of a Surf Board Manufacturer Land Labor Capital Foam Blank The human effort to design and shape the board Sander to shape the foam core Fiberglass The human effort to fiberglass the surf board Tools to apply the fiberglass Chapter 1 Section Main Menu

Section 1 Assessment 1. What is the difference between a shortage and scarcity? (a) A shortage can be temporary or long-term, but scarcity always exists. (b) A shortage results from rising prices; a scarcity results from falling prices. (c) A shortage is a lack of all goods and services; a scarcity concerns a single item. (d) There is no real difference between a shortage and a scarcity. 2. Which of the following is an example of using physical capital to save time and money? (a) hiring more workers to do a job (b) building extra space in a factory to simplify production (c) switching from oil to coal to make production cheaper (d) lowering workers’ wages to increase profits Want to connect to the PHSchool. com link for this section? Click Here! Chapter 1 Section Main Menu

Homework Questions • Page 6 • 1 • 2 • 3 • 4 • 5 • 6 • 7 • 8 • 9 • 10 Chapter 1 Section Main Menu

Section 1 Assessment Page 6 • Key Terms and Main Ideas #1 #6 • Applying Economic Concepts #8 #9 Chapter 1 Section Main Menu

Chapter 1 section 2: Opportunity Cost • Name: ____ • Date: _____ Select & Define 4 Key Terms Page 8 • 1) • 2) • 3) • 4) Chapter 1 Section Main Menu

Warm up • List 5 appealing vacation destinations: • 1) • 2) • 3) • 4) • 5) • Circle your favorite one • Why was that your first choice? Chapter 1 Section Main Menu

Opportunity Cost • Does every decision you make involve trade-offs? • How can a decision-making grid help you identify the opportunity cost of a decision? • How will thinking at the margin affect decisions you make? Chapter 1 Section Main Menu

Trade-offs and Opportunity Cost • Trade-offs are all the alternatives that we give up whenever we choose one course of action over others. • The most desirable alternative given up as a result of a decision is known as opportunity cost. • What are some of the trade-offs for the economic bail out package? All individuals and groups of people make decisions that involve trade-offs. Chapter 1 Section Main Menu

The Decision-Making Grid • Economists encourage us to consider the benefits and costs of our decisions. Karen’s Decision-making Grid Alternatives Sleep late Wake up early to study Benefits • Enjoy more sleep • Have more energy during the day • Better grade on test • Teacher and parental approval • Personal satisfaction Decision • Sleep late • Wake up early to study for test Opportunity cost • Extra study time • Extra sleep time Benefits forgone • Better grade on test • Teacher and parental approval • Personal satisfaction • Enjoy more sleep • Have more energy during the day Chapter 1 Section Main Menu

Create Your Own Decision Making Grid • ______ Decision Making Grid • Benefits _______ Chapter 1 Section ________ Main Menu

Thinking at the Margin • When you decide how much more or less to do, you are thinking at the margin. Chapter 1 Options Benefit Opportunity Cost 1 st hour of extra study time Grade of C on test 1 hour of sleep 2 nd hour of extra study time Grade of B on test 2 hours of sleep 3 rd hour of extra study time Grade of B+ on test 3 hours of sleep Section Main Menu

Section 2 Assessment 1. Opportunity cost is (a) any alternative we sacrifice when we make a decision. (b) all of the alternatives we sacrifice when we make a decision. (c) the most desirable alternative given up as a result of a decision. (d) the least desirable alternative given up as a result of a decision. 2. Economists use the phrase “guns or butter” to describe the fact that (a) a person can spend extra money either on sports equipment or food. (b) a person must decide whether to manufacture guns or butter. (c) a nation must decide whether to produce more or less military or consumer goods. (d) a government can buy unlimited military and civilian goods if it is rich enough. Want to connect to the PHSchool. com link for this section? Click Here! Chapter 1 Section Main Menu

Section 2 Assessment Page 11 • Key Terms and Main Ideas: • #2 • #3 • #4 • Applying Economic Concepts: • #5 • #6 • #9 Chapter 1 Section Main Menu

Ch 1 Section 3 Production Possibilities Curves • Name: _______ • Date: _____ • Select 4 Key Terms (page 13) 1) 2) 3) 4) Chapter 1 Section Main Menu

Warm up • Why do graphs show information more clearly than text? (Please answer in 2 -3 sentences) • Read Skills for Life (page 12) answer questions!!! Chapter 1 Section Main Menu

Production Possibilities Graphs • What is a production possibilities graph? • How do production possibilities graphs show efficiency, growth, and cost? • Why are production possibilities frontiers curved lines? Chapter 1 Section Main Menu

Production Possibilities • A production possibilities graph shows alternative ways that an economy can use its resources. • The production possibilities frontier is the line that shows the maximum possible output for that economy. Production Possibilities Graph 25 0 15 8 14 14 12 18 9 20 5 21 0 Shoes (millions of pairs) Watermelons Shoes (millions of tons) (millions of pairs) 20 15 5 Section b (8, 14) c (14, 12) 10 0 Chapter 1 a (0, 15) d (18, 9) A production possibilities frontier e (20, 5) f (21, 0) 5 10 15 20 25 Watermelons (millions of tons) Main Menu

Efficiency Chapter 1 Section Production Possibilities Graph 25 Shoes (millions of pairs) • Efficiency means using resources in such a way as to maximize the production of goods and services. An economy producing output levels on the production possibilities frontier is operating efficiently. 20 S 15 a (0, 15) 10 b (8, 14) c (14, 12) g (5, 8) 5 d (18, 9) e (20, 5) A point of underutilization 0 5 10 f (21, 0) 15 20 Watermelons (millions of tons) Main Menu 25

Growth Production Possibilities Graph 25 Future production Possibilities frontier T Shoes (millions of pairs) • Growth If more resources become available, or if technology improves, an economy can increase its level of output and grow. When this happens, the entire production possibilities curve “shifts to the right. ” 20 S 15 a (0, 15) b (8, 14) c (14, 12) 10 d (18, 9) 5 e (20, 5) f (21, 0) 0 5 10 15 20 Watermelons (millions of tons) Chapter 1 Section Main Menu 25

Cost • Cost A production possibilities graph shows the cost of producing more of one item. To move from point c to point d on this graph has a cost of 3 million pairs of shoes. Production Possibilities Graph 25 0 15 8 14 14 12 18 9 20 5 21 0 Shoes (millions of pairs) Watermelons Shoes (millions of tons) (millions of pairs) 20 15 c (14, 12) 10 5 0 Chapter 1 Section d (18, 9) 5 10 15 20 25 Watermelons (millions of tons) Main Menu

Section 3 Assessment 1. A production possibilities frontier shows (a) farm goods and factory goods produced by an economy. (b) the maximum possible output of an economy. (c) the minimum possible output of an economy. (d) underutilization of resources. 2. An economy that is using its resources to produce the maximum number of goods and services is described as (a) efficient. (b) underutilized. (c) growing. (d) trading off. Want to connect to the PHSchool. com link for this section? Click Here! Chapter 1 Section Main Menu

Section 3 Assessment (page 18) • Key Terms and Main Ideas • # 1. • # 2. • # 3. • Applying Economic Concepts • # 5. • # 6. Chapter 1 Section Main Menu

Sec. 3 Guided Reading and Review Production Possibilities Curves • 1. Horizontal and vertical axes • 2. points plotted on the graph • 3. line connecting the plotted points • 4. production possibilities frontier • 5. points inside the production possibilities frontier • 6. line outside the production possibilities frontier • 7. graph shows the alternative ways to use an economy’s resources • 8. line on a production possibilities curve that shows the maximum possible output • 9. using resources in such a way as to maximize the output of goods and services • 10. using fewer resources than an economy is capable of using • 11. alternative that is given up because of a decision • 12. Shifting factors of production from making one good or service to another increases the cost of producing the second item. Chapter 1 Section Main Menu