Reading p 3 6 sections 1 1 and

Reading p. 3 -6 (sections 1. 1 and 1. 2) § As you read: § Write the term ECONOMICS vertically along the left side of a notebook page. Begin each line with a word that starts with the appropriate letter. § Each line must help answer the question: What is economics all about? § Include the following terms somewhere in your acrostic: enigma, resource, scarce, science, normative, economics, and positive economics

§ Every resource is scarce § C § O § N § O § M § I § C § S

You can’t always get what you want… § Make a list of 5 things you do not have now but would like to have. § What are some resources that would be needed to produce those things?

Economic way of thinking § Scarcity § People have limited resources but unlimited wants. § Choices § We don’t have enough resources to produce all the things we want. § Scarcity forces societies/individuals to make choices about how to use their scarce resources.

Economic way of thinking § Economics § The science of how societies/individuals allocate their resources to meet their needs. § Economics is the science of choices and costs.

§ Tradeoff – The exchange of one benefit or advantage for another that is thought to be better. § Cost-Benefit Analysis – A way to compare the costs of an action with the benefits of that action. If benefits exceed costs, then the action is worth taking. § Incentive – Any factor that encourages or motivates a person to do something. Prices, taxes, and laws create incentives that influence how people behave. § Resource – Anything used to produce an economic good or a service. § Benefits – what you gain from something in terms of money, time, experience, or other improvements in your situation.

§ Microeconomics – looks at economic decision making by individuals, households, and businesses. § Macroeconomics – focuses on the workings of an economy as a whole.

Read p. 6 -11 (section 1. 3) § Create a chart in your notebook with three columns, one for Principle of Economics (there are 7 of them), one for a symbol that helps explain that principle, and one for a one-sentence summary of the principle

Principle of Economics Scarcity forces tradeoffs Symbol One-Sentence Summary

§ Scarcity Forces Tradeoffs § Limited resources force people to make choices and face tradeoffs when they choose. Economy or comfort? § Costs versus Benefits § People choose something when the benefits of doing so are greater than the costs § Which one? Camping or motel?

§ Thinking at the Margin § Most decisions involve choices about a little more or a little less of something § Is it worth the time and money? § Incentives Matter § People respond to incentives in generally predictable ways § I’ll never speed again!

§ Trade Makes People Better Off § By focusing on what we do well and then trading with others, we will end up with more and better choices than by doing everything by ourselves § This is a good deal. § Markets Coordinate Trade § Markets usually do better than anyone or anything else at coordinating exchanges between buyers and sellers § Bananas from Belize! Mangoes from Mexico! § Invisible Hand http: //www. youtube. com/watch? v=uly. VX a-u 4 w. E&feature=youtu. be

§ Future Consequences Count § Decisions made today have future (and often unintended) consequences § I’ll definitely never speed again!

§ Teach tci visuals---economic enigmas (bottled water, Starbucks, and carpooling) § www. teachtci. com

Examining Economic Enigmas

#1 - Why do people pay for bottled water when it is so much more expensive than tap water? Why do people choose bottled water? What are the BENEFITS and how do they outweigh the COSTS? What are incentives for buying water? Do consumers still want bottled water, or have people switched to filter and Sigg bottles? Do consumers consider the environmental impact of plastic water bottles, even if they are recycled?

#3: Why don’t more people carpool? § Is the cost of gas affordable – even with the current prices? § Do the incentives to carpooling outweigh the hassles? What are the hassles of carpooling? What positive incentives could the government offer? § Do people care that someday all these car emissions will potentially harm the environment? COSTS – PRESENT BENEFITS - FUTURE

Choose one to do on your own! § Economic Enigma 4 § Economic Enigma 5 § Economic Enigma 6 § Why do economy seats on airplanes cost different amounts? § Why do police officers get paid so much less than professional baseball players? § Why does a five-day Disneyland pass cost only 2. 5 times what a one-day pass costs?