Stranded on this desert island Chuck takes action

Stranded on this desert island, Chuck takes action. Now, when we say this, we mean purposeful behavior. Chuck , the individual, has goals that he wants completed. His world is unstable, and he believes he can improve it. He wants food. He wants shelter. He wants warmth. To satisfy these wants, Chuck will employee some means to achieve these ends. This is purposeful action, entirely distinct from unconscious twitches and basic reflexes. Chuck will employee his mind, his reason, to figure out what these means are. The things which Chuck uses as a means to fulfill his ends are called goods.

Consumer Goods These goods will directly satisfy his desires of staying hydrated and staying nourished. By eating, he directly satisfies his hunger and by drinking he directly satisfies his thirst. Because these goods will directly satisfy his desires, we call these things consumer goods. Please note that consumer goods do not need to be literally consumed. The clothes he is wearing, for example, are consumer goods, since they are directly keeping him warm.

Producer Goods Chuck is unable to bite through the coconut. How will Chuck ever solve this problem? Now, he could keep gnawing on it until it breaks, but that's rather inefficient. If he is going to eat the coconut, he's going to need to figure out a way to open the coconut up. So he picks up a rock and starts hitting it. This rock has become something known as a producer good. This rock will not directly satisfy Chuck hunger problem, but he hopes that by using it as a tool, he can obtain his desired consumer good more efficiently.

Capital Good However, the rock is very dull, and doesn't break through the coconuts very easily. As time goes on, Chuck will want to increase his income, or the rate at which he obtains goods, by boosting efficiency. If he spends time developing that rock into something new like a knife, he will have created a special type of a producer good known as a capital good. This producer good is distinct from the rock in that it is a man-made tool, as compared to just something that was lying around naturally. Nature has been developed upon. This capital, by the way, is what we refer to in the name Capitalism.

Specialization What are all the things Chuck needs to “get good” at? How does this effect his time and energy? I, Pencil

Saving and Investment To create a capital good, Chuck had to restrict his consumption, also known as saving, and transfer his labor from producing immediately satisfying consumer goods to the production of the knife so that he may consume more in the future. This process of creating capital goods is known as an economic investment.

Labor & Leisure But the most valuable producer good that Chuck has at any time is himself! When we use our own bodies to produce something, it is called labor. This is in direct contrast to when Chuck uses his body in the way he wants, like relaxing on the beach, swimming, or sleeping. In these cases, Chuck's activity is known as leisure.

Opportunity Costs The real cost of an item is its opportunity cost – what you give up in order to get it The concept of opportunity cost is crucial to understanding individual choice because, in the end, all costs are opportunity costs. Every choice you make means forgoing some other alternative. Some important decisions involve an “either-or” choice Example: You decide either to go to college or to begin working, you decide whether to take economics or to take something else

Opportunity Costs But other important decisions involve “how much” choices Example: you are taking both AP Economics and AP Chemistry, you must decide how much time to spend studying for each

Opportunity Costs “How Much” decisions is a decision to make at the margin – comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less –known as marginal decisions and the study of which is known as Marginal analysis Usually in a decision made at the margin, you decision is involving a “trade-off” which is a comparison of costs and benefits

Opportunity Costs is the real cost of something you must give up to get it When making decisions, it is crucial to think in terms of opportunity cost, because the opportunity cost of an action is often considerably more than the cost of any outlays of money

Scarcity ALL RESOURCES ARE SCARCE You can’t always get what you want! Everyone must make choices all the time Choices can be dependent on money, time, location, conditions, etc. Why do individuals/societies have to make choices? BECAUSE RESOURCES ARE SCARCE

Scarcity What resources are portrayed as “scarce” in the film? - before he lands on the island - when he’s on the island - once he’s back