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Explore the roots of economics with a focus on scarcity, resources, and decision-making. Learn about Xenophon's theories, scarce resources, and the impact of events like 9/11 on the economy. Engage in class discussions and activities to deepen your understanding.
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How do these questions relate to economics? • How badly do I need a winter coat? • Should we rent or buy a house? • Who will use the family car tonight? • Should I go to university next year or take a year off to get a job? • Should I cook supper or order take out? • Should I party tonight or study for my test?
Economics can be defined as the social science that deals with production, distribution, and the use of goods, money, natural resources, and services. • As much as this definition seems right we are missing an important factor…
Xenophon (430 BC- 354 BC) • Free citizen-soldier from Athens who studies under Socrates. Was exiled from Athens from supporting the Spartans. He theorized about private estate management and wealth. He wrote Oeconomicus which is made up of two words that loosely translates into “to manage” and “house”. • Xenophon recognized the connection between the success of agriculture and the arts. • He also spoke of enemies as a source of wealth.
Xenophon recognized that in order to maintain a successful farm he needed laborers that were eager and obedient. • If labourers were scarce his crop yields would decline and so would his wealth.
Scarcity • The concept of scarcity is what drives the study of economics and the very idea of what an economy is. • Scarcity is “an insufficient amount or supply.” • We can revamp our definition of economics to simply state; economics is the study of the way we make decisions about the use of scarce resources.
When considering modern economies we must understand that nearly everything is scarce to some degree, including air, sunlight, even time!
Resources • When we look at limited resources we need to classify them into three categories: • Land - minerals, animals, vegetation, water • Labour– population made of Canadians and immigrants • Capital - manufactured items used to produce goods and services
Discussion • In small groups pick a resource listed below and discuss how its scarcity may affect us here in New Brunswick. Be prepare to share your thoughts with the class. • Fresh Water • Oil • Trade Workers • Military • Our Climate
As mentioned earlier Xenophon wrote about how “good estate managers” can benefit from one’s enemies. • Can you think of any situation where a benefit can be gained from an enemy? • Discuss this idea with your classmates.
9/11 • On Sept. 11th , 2001 the World Trade Center in NYC was struck by two plane, killing an estimate 3000 people and bringing the US to it’s knees politically, militarily, socially and economically. • The WTC was a symbol of American strength and power and therefore a target for terrorists that sought to shake the US and cause as much fear as possible
Questions to Consider • What was the symbolic significance of a successful terrorist attack on the WTC? • Explain the economic significance of the changes in stock market prices illustrated in the previous image. • The short-term consequences of the attack appear most significant. How could you contradict this statement? Back up your thoughts.
Class Activity • Read Water: A Scarce Resource found on page 7-9 • Answer questions 1- 6 in your notebook. Be ready to discuss these questions with the class. • Neat but unfortunate graph
Direct Costs/Opportunity Costs • The process of decision making involves costs, which is divided into two groups: 1. Direct costs are the out-of-pocket expenses that are required to do something. 2. Opportunity costs represent the value of the best forgone alternative in the decision to use a resource.
For example the decision to go to school has direct costs such as the tuition fees and costs of books. • The opportunity cost of going to school is the foregone income that could have been earned while working.
If a land developer decides to build on good agricultural land then the opportunity cost would include the produce that could have been grown on that land.
Opportunity cost is defined as the value of the best possible alternative that is sacrificed when resources are allocated to a specific use. • Here’s a question: Would the opp. costs for attending university differ according to an individuals age? Program selected?
Production-Possibilities Curves • The production-possibilities curve represents the maximum amount products that can be produced using all available resources. • In order to draw this curve, it is assumed that all of the resources available to this society (land, people, tools, and equipment) are being used in the most efficient way.
Ex) A simple society that produces corn and spears is used to demonstrate how production-possibility curves work.
Questions to Consider • How is it possible to improve these yields? • What may change in order to get higher numbers in spears and corn?
Any increase in the amount of available resources, or the use of a new method of production will permit production on the outside of the production-possibilities curve.
The slope of the production possibilities curve represents the opportunity cost of producing more corn. • Why does the opportunity cost of corn change as a society produces more corn? • Different resources of different quantities are used in the production of each product.
The Law of Diminishing Returns • When a fixed resource(land )is combined with increasing amounts of a variable resource(population), the law of diminishing returns states that increases in total output will eventually become smaller and smaller.
In this example we looked at two productions but Canada has many thousands of goods and services that can be produced so our curve would be much more complex. • Canada’s P-P Curve is a reflection of our potential standard of living.
