Basic Economics Bell Ringer

1. Basic EconomicsBell Ringer Today we are paper boxing. Get out a sheet of paper. Fold it so you have four boxes on the front. If you have time, write these titles in the boxes: Why Economics?, Costs and Benefits, Scarcity, Opportunity Cost

2. Why Economics?Based on the clip we just watched, write down one reason you think we should study economics.

3. Why Economics?Based on the clip we just watched, write down one reason you think we should study economics.

4. LAWN BOY: AN INITIATION TO THE BEAUTIES AND MYSTERIES OF CAPITALISM

5. OBJECTIVES • The student will understand the fundamentals of the market system. • The student will understand the definition of Economics. • The student will understand why people have to make choices and that with choosing comes consequences. • The student will understand that with every benefit there is always a cost.

6. CONCEPTS • Economics • Scarcity • Market Economy • Opportunity Cost • Entrepreneurship • Incentives • Supply • Demand • Price • Benefits • Costs • Utility • Labor

7. NATIONAL STANDARDS • Standard 1 : ScarcityProductive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others. • Standard 2 : Marginal Cost/BenefitEffective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are "all or nothing" decisions.

8. NATIONAL STANDARDS • Standard 3 : Allocation of Goods and ServicesDifferent methods can be used to allocate goods and services. People acting individually or collectively through government, must choose which methods to use to allocate different kinds of goods and services. • Standard 4 : Role of IncentivesPeople respond predictably to positive and negative incentives

9. Implementation of the Common Core State Standards • 6-12, Knowledge in the Disciplines • Content area teachers outside of the ELA classroom emphasize literacy experiences in their planning and instruction. Students learn through domain-specific texts in science and social studies classrooms – rather than referring to the text, they are expected to learn from what they read.

10. Implementation of the Common Core State Standards • Academic Vocabulary • Students constantly build the vocabulary they need to access grade level complex texts. By focusing strategically on comprehension of pivotal and commonly found words (such as “discourse,” “generation,” “theory,” and “principled”) and less on esoteric literary terms (such as “onomatopoeia” or “homonym”), teachers constantly build students’ ability to access more complex texts across the content areas.

11. Implementation of the Common Core State Standards • Text-based Answers • Students have rich and rigorous conversations which are dependent on a common text. Teachers insist that classroom experiences stay deeply connected to the text on the page and that students develop habits for making evidentiary arguments both in conversation, as well as in writing to assess comprehension of a text.

12. WHICH ONE OF THESE TWO THINGS WOULD YOU RATHER BE DOING RIGHT NOW?

13. COSTS AND BENEFITS A Cost is something you give up in making a choice. A Benefit is something you gain. What would be the costs and the benefits of doing this now?

14. COSTS AND BENEFITS Why have you chosen to do this instead? What are the costs and benefits? WHY MUST YOU CHOOSE? BECAUSE OF SCARCITY

15. SCARCITY SCARCITY TELLS ME I CAN’T DO BOTH, I HAVE TO MAKE A CHOICE. SINCE YOU CAN’T HAVE EVERYTHING YOU WANT ECONOMICS HELPS US GET THE MOST OUT OF WHAT WE CAN HAVE.

16. T.I.N.S.T.A.A.F.L. Have you ever heard the phrase: “There is no such thing as a free lunch”?

17. OPPORTUNITY COST EVEN THOUGH THE SIGN SAYS SO, IS IT TRULY FREE? I MAY NOT GIVE UP MONEY, BUT WHAT AM I GIVING UP BY ATTENDING?

18. IF I EAT LUNCH FROM 12:00 TO 1:00 P.M., WHAT CAN’T I DO?

19. OPPORTUNITY COST IS THE BEST OPTION GIVEN UP WHEN YOU MAKE A CHOICE What is the Opportunity Cost of the following choice? • Buying a gift for a friend. • Working at a job after school. • Waiting on line for an hour to buy a new cell phone. • Playing on your Xbox for two hours after dinner. Did you all have the same answers? Why not?

20. WHAT IS ECONOMICS? Economics is the study of how people make choices. When you make a good economic decision the benefits will be greater than the costs.

21. UTILITY = SATISFACTION He made a good decision He made a bad decision

22. PEOPLE RESPOND TO INCENTIVES INCENTIVES are things such as rewards that motivate a person to do something. Punishment is meant to be a disincentive.

23. WHY DO PEOPLE MAKE THE DECISION TO GO INTO BUSINESS FOR THEMSELVES?WHAT ARE THE INCENTIVES?

24. In Box 5, make a T-chart with benefits on one side and costs on the other.WHAT WOULD BE THE BENEFITS OF OPENING YOUR OWN BUSINESS AND WHAT WOULD BE THE COSTS? • PROFIT • BE YOUR OWN BOSS • FREEDOM • FILL A NEED • HAVE MORE CONTROL OVER MY WORK SCHEDULE • PAID MORE FOR MY WORK • GREAT CHANCE OF FAILURE • NO ONE TO SHARE THE COSTS WITH • NO ONE TO SHARE RESPONSIBILITIES OR SKILLS • DO THE JOB OF THE WORKER AND THE BOSS BENEFITS COSTS

25. INCENTIVES HELP PEOPLE MAKE CHOICES THERE WAS A TIME WHEN THE MAJORITY OF ADULT AMERICANS SMOKED AND PEOPLE THOUGHT IT LOOKED COOL.

26. CHANGING INCENTIVES CHANGE PEOPLE’S CHOICES WE GOT EDUCATED NOW LESS THAN 25% OF THE U.S. POPULATION SMOKES AND THE NUMBERS HAVE BEEN SHRINKING FOR DECADES. WHAT CHANGED?

27. SO, TO RECAP!!! • SCARCITY TELLS US WE CAN’T HAVE EVERYTHING WE WANT • EVERY DAY OF OUR LIVES WE HAVE TO MAKE CHOICES • IN MAKING CHOICES WE WEIGH THE BENEFITS AGAINST THE COSTS • NOTHING IS FREE, THERE IS ALWAYS AN OPPORTUNITY COST • A GOOD ECONOMIC DECISION CREATES MORE BENEFITS THAN COSTS • INCENTIVES HELP US TO CHOOSE

28. WHAT IS A MARKET? • FLEA MARKET • STOCK MARKET • FARMERS’ MARKET • GROCERY STORE • BOSTON MARKET • WAL-MART • HOUSING MARKET • JOB MARKET When the word MARKET is said, what are some examples or images that come to mind?

29. WHAT IS A MARKET? • Buyers arrive with money looking to purchase things. • Sellers offer goods or services in exchange for money. What are some characteristics that all of these examples have in common?

30. COMMON MARKET CHARACTERISTICS • Buyers won’t be satisfied if they value the money in their pockets more that the items for sale. • Sellers won’t be satisfied if they value the items for sale more than the buyers are willing to pay. • Both buyers and sellers have an incentive to reach a compromise price in order to be mutually satisfied.

31. THE MARKET ECONOMY THE WORLD’S ECONOMIES PROVIDE US WITH A LOT OF CHOICES AND THE WORLD’S SHOPPERS HAVE A LOT OF DIFFERENT INTERESTS.

32. THE MARKET ECONOMY IN AMERICA, WE HAVE A LOT OF FREEDOM TO DECIDE WHAT WE WANT TO DO WITH OUR LIVES AND HOW WE WANT TO SPEND OUR MONEY

33. THE MARKET ECONOMY ALLOWS SELLERS TO COMPETE FOR CONSUMER DOLLARS SUPPLY DEMAND

34. PRICE OF LABOR WHY DOES THIS GUY MAKE $30,000,000? WHY DOES THIS GUY MAKE $7.25?

35. THE ANSWER IS: SUPPLY AND DEMAND • WE LOVE BASKETBALL, ESPECIALLY HIGH FLYING AND ACROBATIC DEFYERS OF GRAVITY (HUGE DEMAND) • THERE’S ONLY ONE LeBRON (TINY SUPPLY) • WE LOVE FAST-FOOD THOUGH WE KNOW IT’S NOT GOOD FOR US (HUGE DEMAND) • THERE ARE SEEMINGLY ENDLESS CHOICES FOR IT AND THE PROCESS OF MAKING IT DOESN’T REQUIRE UNIQUE SKILLS. JUST ABOUT ANYONE CAN FILL THE JOB. (EVEN BIGGER SUPPLY)

36. DO YOU KNOW WHAT THIS IS? It’s the Motorola DynaTAC 8000X , the world’s first cell phone. It went on sale March 6, 1983 and the initial price was $3995 ($9322 in current dollars). It had enough battery life for 30 minutes of talk, its memory could store 30 phone numbers, and there was a waiting list of thousands anxious to buy it.

37. Today we have cellular technology that allows for all kinds of communication, video streaming, and downloads with more computing power and memory then the technology that sent all of our astronauts to the Moon. Many are given away with service contracts. HOW DID THAT HAPPEN?

38. THE ANSWER IS: SUPPLY AND DEMAND • IN 1983, ONE COMPANY MADE CELL PHONES WITH VERY EXPENSIVE PARTS AND A GREAT AMOUNT OF COSTLY LABOR (TINY SUPPLY) • PEOPLE WERE CRAZY ABOUT IT AND WAITED FOR MONTHS BEFORE DELIVERY (BIG DEMAND) • NOW, MANY COMPANIES MAKE A VARIETY OF PHONES WITH VERY INEXPENSIVE PARTS AND VERY LITTLE HUMAN LABOR INVOLVED (HUGE SUPPLY) • MOST CONSUMERS HAVE A PHONE AND SPEND MOST OF THEIR MONEY ON SERVICES (DEMAND IS SLOWING DOWN)

39. READ EACH STATEMENT BELOW AND DECIDE WHETHER THE PRICE OF THE ITEM WILL GO UP OR DOWN. ALSO, IS THIS BECAUSE OF A CHANGE IN SUPPLY OR DEMAND? • A TICKET TO SEE YOUR FAVORITE FOOTBALL TEAM NOW THAT THEY’VE MADE THE PLAYOFFS • A GALLON OF GASOLINE AFTER A HURRICANE SHUTS DOWN OIL DRILLING PLATFORMS IN THE GULF OF MEXICO. • A BUSHEL OF CORN AFTER FARMERS IN IOWA DISCOVER A MORE POWERFUL FERTILIZER. • A PAIR OF DESIGNER JEANS AFTER EVERYONE’S FAVORITE CELEBRITY IS SEEN WEARING THEM THE NIGHT BEFORE ON AN AWARDS SHOW. • A BIG MAC AFTER RESEARCHERS DETERMINE THAT EATING TOO MUCH FAST FOOD CAUSES STUDENTS TO GET LOWER GRADES.

40. SO, TO RECAP!!! • MARKETS ARE CREATED TO ALLOW BUYERS AND SELLERS TO PROFIT. • SELLERS MAKE MONEY AND BUYERS GET THE ITEMS THEY’RE LOOKING FOR. • THE PRICE HELPS BUYERS MAKE DECISIONS ON WHAT THEY WILL PURCHASE AND HELPS SELLERS DETERMINE WHAT THEY SHOULD PRODUCE. • WAGES ARE DETERMINED BY THE SUPPLY AND DEMAND FOR THE JOB SKILLS OFFERED. • IN ORDER FOR THE MARKET TO WORK IT MUST BE OPEN TO EVERYONE

41. IS THE MARKET POWERLESS TO DO ANYTHING ABOUT THE PRICE OF GASOLINE?

42. IS ANYTHING IN THIS WORLD TRULY PRICELESS?

43. ERROR END OF FILE You have reached the end of the current year’s Lawn Boy PowerPoint. Slides after this slide are leftover slides from previous years.

44. NATIONAL STANDARDS • Standard 1 : ScarcityProductive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others. • Standard 2 : Marginal Cost/BenefitEffective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are "all or nothing" decisions.

45. NATIONAL STANDARDS • Standard 3 : Allocation of Goods and ServicesDifferent methods can be used to allocate goods and services. People acting individually or collectively through government, must choose which methods to use to allocate different kinds of goods and services. • Standard 4 : Role of IncentivesPeople respond predictably to positive and negative incentives

46. Implementation of the Common Core State Standards • 6-12, Knowledge in the Disciplines • Content area teachers outside of the ELA classroom emphasize literacy experiences in their planning and instruction. Students learn through domain-specific texts in science and social studies classrooms – rather than referring to the text, they are expected to learn from what they read.

47. Implementation of the Common Core State Standards • Academic Vocabulary • Students constantly build the vocabulary they need to access grade level complex texts. By focusing strategically on comprehension of pivotal and commonly found words (such as “discourse,” “generation,” “theory,” and “principled”) and less on esoteric literary terms (such as “onomatopoeia” or “homonym”), teachers constantly build students’ ability to access more complex texts across the content areas.

48. Implementation of the Common Core State Standards • Text-based Answers • Students have rich and rigorous conversations which are dependent on a common text. Teachers insist that classroom experiences stay deeply connected to the text on the page and that students develop habits for making evidentiary arguments both in conversation, as well as in writing to assess comprehension of a text.