Today’s Agenda • Warm-up • Check signatures • Scarcity Activity • Notes • Factors of Production Chart • HW – NOTEBOOK CHECK THURSDAY!
Economics – What is it?? Essential Questions: What is Economics? Why is Scarcity the basic economic problem?
Definition • Economics is: • Study of human efforts to satisfy unlimited wants • What does this mean in your own words?
The Problem: • The basic economic problem that ALL societies face is scarcity. • Scarcity – result of not having enough resources to produce all the things people would want
Needs vs. Wants • What is a need? • Basic requirement for our survival • Ex: Water, food, clothing, shelter • What is a want? • A way of expressing a need • Ex: wish for, crave, desire
TINSTAAFL • Is anything really “free”? • TINSTAAFL = “There is NO such thing as a free lunch” • Even if YOU are not paying, somebody paid for the production of it
3 Questions of how to use limited resources. • WHAT to produce? • Society can’t have everything it wants, so it must decide what to produce • Example – Should the U.S. worry about making more military weapons or more food/shelter to take care of the homeless?
3 Questions of how to use limited resources. • HOWto produce? • What method will be used to produce things? • Should factory owners use more machinery and less workers or more workers and less machinery?
3 Questions of how to use limited resources. • FOR WHOM to produce? • Who will receive the existing items/supplies? • Who is it allocated to?
Today’s Agenda 9/10 • Warm-up • Notebook Check • Review Factors of Production • Goods/Services Notes • Vocab Activity
Goods • Good • An item that is economically useful (satisfies a want)
Goods • Consumer Goods • Intended for final use by individuals • Examples: Ipods, Cell Phones • What are some items around the class that would be consumer goods?
Goods • Capital Goods • Manufactured goods used to produce other goods and services • Example: an oven in a bakery
Services • Service • Work that is performed for someone • Ex. Barber • What are some examples of a service we see in our everyday lives?
Values • Value is a worth that can be expressed in dollars and cents. • The PARADOX OF VALUE – When necessities have little value, and non-necessities have much higher value. • The current price of gold is $993 per ounce • The current price of water is $ 4.50 for 12 bottles
How is Value calculated? • Value = Scarcity + Utility • Scarcity means….. • Utility - the ability to be useful or provide satisfaction • How does gold, diamonds, and other jewels fit into the paradox of value?
Wealth • Wealth is: • The accumulation of products that are tangible, scarce, useful, and transferable. • Wealth is the accumulation of many things that have VALUE • Who do you consider to be wealthy?
Today’s Agenda • Circular Flow of Economic Activity Chart • Activity • Critical Thinking Questions • Project Assignment
Essential Questions • How do consumers and businesses interact with each other in the economic flow of activity?
___________________Markets Examples: __________ Income _________ Spending __Goods___________ Buy ___________________ Goods _________ Land _________ Labor _________ Businesses Individuals ___________________Markets Examples: Payments from _____________ Income from ___________ Circular Flow of Economic Activity
Businesses – the companies providing goods and services • Individuals – the consumers (people, us) that want to buy/use the goods and services
Markets • Product Market (top box)– where businesses sell their goods and services to consumers • Individuals spend their money in product markets and get goods and services • Businesses get INCOME from consumers buying goods and services
ProductMarkets Business Income Consumer Spending Goods and Services Buy ___________________ Goods and Services Land _________ Labor _________ Businesses Individuals Payments for Income from ___________
Markets • Factor Market (bottom box)- where productive resources are bought and sold • businesses hire labor for wages/salaries, get land, etc. • PAYMENTS for resources (Factors of Production) • Individuals get INCOME from working in factor markets
ProductMarkets Business Income Consumer Spending Goods and Services Buy Productive Resources Goods and Services Land Capital Labor Entrepreneurs Businesses Individuals Factor Markets Payments for Resources Income from Working/resources
Critical Thinking Question • Answer the following question and hand in when completed • As a consumer, what role do you play in the circular flow of economic activity?