Unit 7EconomicsMacroeconomics December 2, 2013
The study of scarcity, or how society tries to satisfy unlimited wants through the use of limited resources.
Words to Know: • Scarcity: the gap between what the consumers would like (UNLIMITED) and what the consumers can get (LIMITED). • Trade Off: the process of giving up one desire in order to satisfy another desire. • OpportunityCost: the value of what we give up in order to get or do something else. (LOST)
Trade Offs &Opportunity Costs • Two highly talented athletes want to compete for Coach ‘M’ who has only 1 opening on the team. Each are equally talented. Since he can only keep one, he must choose: • he decides to keep athlete ‘X’ because he is also a good student and is highly ‘coachable’. • What was the trade off? • What is the opportunity cost?
Need: something that is required • Examples: • Want: something that is desired • Examples: • Good: a tangible product • Examples: • Service: a treatment (you cannot touch it!) • Examples:
Consumer: a buyer • Examples: • Producer: The seller • Examples: • Production: the process of making goods or services. • Examples:
Review Budgeting • Wage: $11.00 • How much do they make an hour? • How much do they make a week? • How much do they make a month? • How much do they make a year? • Salary: $110,000. • How much do they make an hour? • How much do they make a week? • How much do they make a month? • How much do they make a year?
Review, Opportunity Cost • On Saturday Ty’Shawn is thinking about going to the Panthers game. If he doesn’t go to the game he might stay home and work on homework, help his neighbor paint his house, or hang out and watch TV. What is an opportunity cost of Ty’shawn choosing to help his neighbor? • What is the opportunity cost of choosing to go to college?
Review, Opportunity Cost • The North Carolina government decides to build more prisons at the cost of $20.5 Billion. In order to do this they will increase the sales tax. The state decided to build prisons instead of much needed schools, rehabilitation programs, and gun safety programs. • John decided to go a party Friday night instead of studying for his Civics and Economics Test. Studying increases his chances of passing the Goal 6 test. He could have studied for his test, or gone to the movies.
Review, Opportunity Cost • Tom chose to get a massage this week instead of getting new sneakers or pay for his cell phone bill and cable bills. • Carrie decided to spend her last $3.00 on a bottle of lotion. During lunch the next day she is unable to buy herself any food. She is hungry the rest of the day. She gets into her car and her gas light is on E. • Jaquan studied all night for his Geometry Test. He wanted to go out with is friends and go see the new Happy Feet Movie. He passed his test with a 97%.
Personal Financial Literacy • Online!!!!! • Visit www.everfi.com • Select ‘Login’ (on the top right) • Select ‘Sign-Up’(on the top right) • Put in Information you will remember!!!!! • When you create a LOG-IN! REMEMBER YOUR INFORMATION! WRITE IT DOWN! TAKE A PICTURE! REMEMBER IT!!!!!!!!!!!!!!!!!!!!!!!! • After you do this, get out a pair of headphones, and Sit tight and wait
3 Basic Economic Questions • What to produce? • How to produce? • For whom to produce?
There are 4 Factors of Production: • Land or Natural Resources • Capital • Labor • Entrepreneurship
Land or Natural Resources • Materials that are NATURALLY MADE and transformed into something else • Examples: • Oil • Timber • Land • Crops • Natural gas • Milk
RENEWABLE Can be replaced or renewed or recycled ex: wood, water, crops NON-RENEWABLE Once used, resource is gone Ex: Oil, Natural Gas, Gold 2 Types of Natural Resources
PEOPLE who work to produce a good or service Example: Construction worker Teacher Line cook LABOR
Types of Labor • Blue Collar: typically performs “manual” labor (uniform) • White Collar: typically performs more “business” like labor • Professional: most advanced type of labor- highest educational degrees. • Skilled: typically knows a craft
Capital • PHYSICAL • Man-made instruments that assist in making something else • Examples: • Hammer • Robot • Book • Computer
Capital • HUMAN • Investment in knowledge or training for a laborer to become more productive • Examples: • Training programs • Skills development • Advanced degrees
People who RISK time and money ($) to start their own business and organize the other factors of production. Examples: P. Diddy Lemonade Stands Martha Stewart Entrepreneurs
Agenda • Notes: • Productivity • Types of Economies • Computer Lab • 30 Minutes-Part 1-3 PFL Project • 30 Minutes on EverFi.com • Everything is due by Friday
Productivity • The measure of the efficient use of an economy’s resources. • Making the MOST of the resources you have. • Utilizing resources to 100% of their capacity. • UNDERUTILIZATION: not using resources efficiently • Production Possibilities Curve: graphic representation of an economy’s productivity potential
Units of food Units of clothing (millions) (millions) 8m 0.0 7m 2.2m 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m A Production Possibilities Curve Units of food (millions) Units of clothing (millions)
Productivity • The more productive a nation’s economy, the more potential for profit. • A company’s goal is to maximize profit. One way this can be done it to increase productivity.
Division of Labor • When work is divided amongst many workers. • Each worker specializes in one task making the work go faster and more efficient.
Assembly Line • Each member of the line does the same procedure or task on each input item. • The more items created the more potential for profit a company has.
Specialization • When each worker learns a specific/one job and becomes a professional in that specific task.
Law of Diminishing Returns • By adding more factors of production (i.e. technology, better trained workers, better entrepreneurship) it leads to greater efficiency. • But ONLY to a certain point and then you begin to lose efficiency.
Law of Diminishing Returns • Maximum returns is 300- using 200 agents. • When you add any additional agents, the number of returns decreases.
Comparative Advantage • When a nation has an advantage in the production of a particular product over another. • Example: • The Southern Colonies had a comparative advantage to produce cotton over the New England Colonies.
Types of Economic Systems • Traditional • Command • Market • Mixed
Traditional Economy • What did you Produce? • Determined by tradition, ancestors, customs
How did you Produce it? • Produce the same way its always been done; NO SPECIALIZATION • For Whom did you Produce? • Produce for tribe, village, local community • Examples: • Ex. Native American, Aborigines, Amish • Barter: trade item for item (no money) • * limited growth potential!
Command Economy • What did you Produce? • Determined by the government or central planner
How did you Produce it? • Told how to by central planner; SPECIALIZATION • For Whom did you Produce? • The gov’t or central planner • Ex. China, N. Korea, the former U.S.S.R. (Soviet Union)
Market Economy • What did you Produce? • Determined by whatever would make the most profit
How did you Produce it? • The way that made the most profit; SPECIALIZATION • For Whom did you Produce? • Consumers, people interested in product • Ex. UNITED STATES!
Mixed Economies • Have elements of market economies with some command • Ex. Canada, France, England
December 12, 2013 Pick up the THREE Sheets!
Agenda • Housekeeping • What time do we have left? • Demand • .ppt • Individual Work • Changes • Supply • .ppt • Individual Work • Changes • Supply and Demand, The Epic Merger • Equilibrium Prices • Shortages and Surpluses
Demand The desire to own something and the ability to pay for it!