Activator

1. Activator • During the holiday season of 1996, a children's toy appeared on Good Morning America. The toy, produced by Mattel, had sat on the shelves with very little sales until it appeared on the show. After the toys appearance, its popularity improved and it became the most sought after product of the holiday season. Unfortunately, Mattel did not anticipate the doll’s popularity, only producing 400,000 units, and were not able provide the product in a timely manner at the store level (over 1,000,000 were in demand).

2. Elmo was sold for as much as $2500 through a classified ad

3. Elmo Videos Elmo Commercial Elmo Good Morning America

4. Fundamental Economic ConceptsScarcity and the Factors of Production • Scarcity - fundamental problem facing all people; unlimited wants and limited resources to satisfy those wants • The Basic Economic Problem: • Humans' wants and needs are infinite, while the resources needed to satisfy those wants and needs are limited and scarce.

5. Scarcity • What makes something scarce? • Something is scarce when it is both limited and desirable • e.g. - Lebron James, oil, time, rest, grass in the winter (north) etc. • Scarcity applies to everyone • Scarcity represents permanent problems that cannot be solved

6. How to allocate (distribute) scarce resourcesWho gets scarce stuff?

7. Application Question • List three things that you feel are scarce in your life, what has caused them to become scarce?

8. How to Login Username: PIN # Password: Birthday or password used for login

9. How to access My Quizzes Go to Google Type in Glynn Academy Landinguin Go to My Quizzes Enter your first and last name (password is your pin) Complete Short Answers, pgs. 2-6

10. What is Economics? • Economics – the study of choices; how individuals and groups seek to satisfy their wants and needs in light of scarcity

11. What are the Scarce Resources? Factors of Production • Factors of Production - resources required to produce goods and services

12. Land • Land – natural resources not created by human effort that are used to produce goods and services • The "gifts of nature". • Examples: Forests, fish, oil, gas, cattle, etc...

13. Labor • Labor – time and effort that a person devotes to producing goods and services. • Labor resources are those provided by the body and minds of men and women. • Examples: doctors, teachers, construction workers, etc...

14. Capital • Physical Capital – also known as Capital Goods, human made objects used to create other goods and services • Examples: Machines, phones, computers, equipment • Human Capital – skills, abilities, and specialized talents of people • Examples: College, training, technical school, etc. • Financial Capital – money, used by businesses to invest in their business • Examples: money

15. Entrepreneurs • Entrepreneurs – ambitious business people who organize the factors of production to create new goods and services • Entrepreneurs are the "risk takers" who produce a good or service that they believe will succeed in the marketplace.

17. Factors of Production Land Capital Labor Entrepreneur + + + =

18. Factors of Production

19. Scarcity Videos • Water Scarcity • Water Scarcity Part 2 • Scarcity Video

20. Classify the Factors of Production in the following scenario: • You decide to order a pizza to satisfy your wants. First, you picked up the telephone and gave your order to the owner that entered it into her computer. The information came up on the chief baker’smonitor in the kitchen and he assigned it to one of his cooks. The cook cook used his knowledge of mixing dough out of salt, flour, eggs, and milk. The cook finished mixing dough, washed his hands in the sink, and prepared your pizza using tomato sauce, cheese, and sausage. He then placed the pizza in the oven. Within 10 minutes the pizza was cooked and placed in a cardboard box. The delivery person then grabbed your pizza, jumped in the company car, and delivered it to your door.

21. Classify the Factors of Production in the following scenario: Owner _________________________________ Computer _________________________________ Chief baker’s monitor _________________________________ Kitchen _________________________________ Cooks _________________________________ Knowledge of mixing dough _________________________________ Salt, flour, eggs, and milk _________________________________ Sink _________________________________ Tomato sauce, cheese, and sausage _________________________________ Oven _________________________________ Cardboard box _________________________________ Delivery person _________________________________ Company car _________________________________ Entrepreneur Physical Capital Physical Capital Physical Capital Labor Human Capital Land Physical Capital Land Physical Capital Physical Capital Labor Physical Capital

22. Examples of Factors of Production

23. Needs vs. Wants • Need – a basic requirement for survival • e.g. – food, clothing, education, etc… • Want – not a basic requirement for survival; a means of expressing a need • e.g. – cheeseburger, Abercrombie and Fitch, University of Georgia, etc… OR

24. Goods Good – physical, tangible(touchable) product • i.e. – Automobiles, Video Games, Cell Phones, CD’s, Tickle Me Elmo, etc…

25. Services Service – a non-tangible action or activity that is performed for someone else • i.e – Financial Advisor, Stock Broker, Movies, Dentist, Teachers, etc..

26. Show 4/5Commercials for following Chart

27. Goods and Services Chart

28. Daily Assignment Chapter 1 Section 1 • Why does scarcity apply to everyone? • List a good and a service that you have purchased in the past month. • What are some things that you have that might be considered wants by other societies? Explain why. • Last year, you were trying to make a decision on what kind of car you wanted your parents to buy you for your birthday. You had two choices: 1) 1984, Honda Accord for $2,000, or 2) 2010 fully stocked Infiniti G37 for $52,000. Which one of these would be considered a want, and which one a need and why? • “Hank” works two jobs, one in the morning and one at night. At his morning job he sells furniture at a furniture store. At his night job he works as a computer technician. Which one of his jobs creates a good and which provides a service? • Microsoft offers all of their employees the opportunity to attend the local university for a higher education, free of charge. What would be the motivation for investing in human capital? • Which factor of production is represented by each of the following? (a) an office building, (b) an assembly line worker, (c) a tree used to make paper, (d) unused soil, (e) Oprah Winfrey

29. Activator Directions: On a 3 column chart, label it as shown below. In the second column, list 3 possible alternatives that you could have made other than your choice to come to school. In the third column, list the alternative that you would have desired the most.

30. Tradeoffs • Trade-off – alternatives that we give up whenever we choose one course of action over another • We always give up something to get something else • “There is no such thing as a free lunch.” (TINSTAAFL) • Individuals, Businesses and society all face tradeoffs

31. Opportunity Cost • Opportunity Cost – used by economists to measure the cost of decision-making; the value of the what we give up • Next best alternative use of money, time, or resources Sleeping (Opportunity Cost) Coming to Economics

32. Today’s Assignments • Short AnswerOpportunity Cost and the PPF pgs. 8-18 • Scarcity Article and Questions, found under “online assignments” link

34. Trade-Offs Individuals and Trade-Offs – studying one subject vs. another, watching TV or working out, etc. Business Trade-Offs – producing iPod vs. iPhone Society and Trade-Offs – “guns or butter”, military or consumer goods

35. Decision-Making Grid or No Yes Yes No No Yes Yes Yes No Yes

36. Decision-Making Grid or No Yes Yes No No Yes Yes Yes No Yes

37. Thinking at the Margin 15 15 6:15 6:30 6:45 • - - - • - - - • 15 • 15

38. Thinking at the Margin • Margin – an increment (small unit), a border/edge • Thinking at the margin – analyzing the costs and benefits of incremental (small) decisions

39. Thinking at the Margin $9.00 13.50 13.50 13.50 40 41 42 43 • 40 hours of play • 1 hour playing video games • 1 hour with family • 1 studying economics

40. Thinking at the Margin 1 2 3 4 5 6 7 8 10 9 8 4 2 0 -2 -10

42. Factors of Production Land Capital Labor Entrepreneur + + + =

43. Production Possibilities Frontier Activity Land Physical Capital Laborers • Identify Factors of Production: • Paper _____________________________ • Pencil, scissors, roll of tape ________________________ • Group members ______________________________ • You will have 3 5 minute rounds of production: • 2 sheets folded in pattern a • Round 1: Make only links • Round 2: Make only smiles • Round 3: Make half smiles and half links • Round 4 (fired worker 1 paper): Make half smiles and half links • Round 5 (rehired 4 pieces of paper plus extra scissors: Make half smiles and half links

44. Production Possibilities Frontier Activity

45. Production Possibilities Model • What is the PPC Model? • PPC Model – shows/illustrates the possible combinations of goods and services that can be produced by a single nation, firm or individual given the productive resources available • What does it show? • That nothing is free and that everything has an opportunity cost • If society wants more of one thing then it must give up something in return • Used to visually represent opportunity cost

46. Basics of the production possibilities frontier model Unattainable/Economic Growth Frontier/Efficiency Underutilization/Inefficiency A B C D E 1,000

47. Production Possibilities Model • What basic economic concepts can it be used to model? • Scarcity • Tradeoffs • Opportunity cost • Economic growth • Efficiency • Unemployment Quantity of Computers Produced Production Possibilities Frontier 3,000 2,200 2,000 1,000 F A B E 300 600 700 0 1,000 Quantity of Cars Produced

48. Production Possibilities Curve • Efficiency – what one is capable of producing; using resources in such a way as to maximize the production of goods and services * • Points along the curve, (a – c) * Efficiency

49. Underutilization (Inefficiency) Underutilization/Inefficiency • Underutilization – using fewer resources than an economy/business is capable of; inefficient use of resources • Points inside the curve, d (inefficient use of resources)

50. Growth Growth • Growth (future technology) – the change in ability to produce, reflects a change in the curve; Currently unattainable level of production • New frontier (usually as a result of new technology)