ECONOMICS UNIT 1 CHAPTER 1 SECTION 2 Bell

ECONOMICS UNIT 1 CHAPTER 1 SECTION 2

Bell Ringer �Is it worth it to you to buy a more expensive pair of jeans or a cheaper brand? �When you buy something do you think about how many hours you would have to work to earn the money to purchase it?

Economic Theory �A simplification of economic reality used to make predictions about the real world. �Rational- People try to make the best choices they can, given the available information �Rational Self-Interest- Try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit.

Statements �Positive Economic Statement- A statement about economic reality that can be supported or rejected to facts. What is. . �Normative Economic Statement. Reflects someone’s opinion. What should be, in opinion

Make a Positive and Normative Statement…

Marginal Analysis �Marginal- Incremental, additional, extra, or one more; refers to change in an economic variable, a change in the status quo. �Ex. You compare the marginal benefit you expect from eating dessert (the added satisfaction) with its marginal cost (the added dollar, cost, time, and calories)

Market Economies �Market Economics(microeconomics) study of economic behavior in particular markets, such as the market for computers. �National Economics(macroeconomics) study of the economic behavior of the economy as a whole, especially the national economy

Market Participants – 4 Types �Households- play leading role in economy as consumers Demand the Firms Governments Rest of World resources that households Supply and then used these resources to supply the goods and service the households demand Markets- the means by which buyers and sellers carry out exchanges

Explaining the Circular Flow Model �Divide into groups of four students each. �You will be assigned a group number, either 1 or 2. �Using the model from the previous slide and the internet: �Group #1: You will work together to trace the flow and analyze the Inner Circle of the circular model �Group #2: You will trace the flow and analyze the Outer Circle of the circular model �After 10 minutes 1’s will pair up with 2’s and educate the student’s on their Circle.

What were our results?