Chapter 1

1. Chapter 1 The Engine That Runs The Economy

2. Chapter 1.1: Decisions, Decisions

3. Grocery Store Products

4. Consumer Decisions • As a consumer, you have the powerto choose what you want to buy and whereyou want to buy it. • You can choose not to buy from businesses whose products you don’t like or whose prices are too high.

5. Bell Ringer 1 • Think of a business in the area that has shut down. • Write down the name of the business • Brainstorm then write down some reasons why you think that business shut down. • Location, service, products, etc.

6. Consumer Decisions • You have the power to make so many different decisions that you may wonder… Where do I start? • Knowing your values is a good place to begin.

7. Values • Principles and standards in which you live by • Varies by person and can change over time • Life Values- things that are important to you in your life. • Example: Spending time with family and friends

8. Classification Of Values • Work Values: career/job • Working for business that respects the environment • Cultural Values: heritage • Dress in clothes that shows heritage • Social Values: community • Working to keep community clean • Demographic Values: where you live • Values will change at different stages in your life. • Living in city vs. suburbs

9. Vocab… • Goals- things you want to accomplish • Needs- things you cannot live without • Wants- things you desire but do not need to survive

10. Vocab.. • Opportunity Cost- value of next best alternative whether you make a choice • When making a decision, sometimes there are things you need to sacrifice and give up. Example: You’ve earned $60 for allowance and want to buy a new video game but also wanted new Nike Shoes. You can only afford to buy one of the two items… you must make a decision.

11. Vocab Continued.. • Long-term goals- things you want to achieve over a period of years during your lifespan • Life-span- time from birth to death

12. Your Life Span

13. Life Span Chart • You are going to make a life span chart for your life. • Include any milestoneyou can remember throughout your life as well as things you plan to do in the future. • Sports played • Traveling • School milestones/ events • Clubs/activities • Future Plans: college, marriage, house, bucket list

14. Chapter 1.1 Activity • Review Vocab • Identify 2 Short-term goals • Identify 3 long-term goals

15. Chapter 1.2: Make Decisions

16. Decision Making Process • 5 S’s • Specify: Identify needs and wants you are trying to fulfill. • Search: Gather Information about alternative choices • Sift: Evaluate Options. Consider opportunity cost • Select: Make a choice • Study: Evaluate result

17. My Car Buying Example • Trying to decide between buying a used Honda civic and a brand new Honda civic. • Specify-Need a reliable car to get me to and from NIU. Good gas mileage, sharp looking, power locks and windows, appealing to the eye. • Search- Go to the car dealer and look at options. • Sift- Choose between options and consider monthly payments • Select- 2009 Honda Civic- cheaper payments • Study- Happy with my decision 

18. Decision Making Process • Rational Buying Decision • Choice made in an organized, logical manner • Impulse Buying Purchase • Purchase made on a whim, without using a decision making process. • Buying without considering alternatives.

19. Decision Making Scenario • Sammie is an Oswego senior and has to make a decision of which college to attend next school year. Sammie knows she wants the option of coming home on some weekends so she would like a school that is not too far away. Also, her parents are willing to pay for college as long as the price is within reason (middle to low end). Sammie is considering majoring in education, but still wants to explore her options, so it is important that the school has a variety of majors. Last, Sammie is a very involved student at OHS and wants to get involved with extracurricular activities such as clubs, sports, and attending sporting events.

20. Help Sammie through the decision making process… • Use The Decision Making Process • Specify- Identify Needs and Wants • Search- Gather Info • Sift- Evaluate options • Select 3-4 colleges Sammie should attend • Write criteria next to each college • Select • Choose A college • Study

21. Chapter 1.3 Understanding Economic Systems

22. Economic Systems • Every nation has an Economic System. • Economic System • The way a nation uses resources to produce goods and services.

23. Production • Creation of goods and services. • Manufacturing products such as cars or pencils.

24. Resources • Things that are used to create other goods and services • Human Resources: skills, training, abilities people have • Nonhuman Resources: raw materials, tools, and manufactured products such as: oil, tractors, and lumber used to make goods and services

25. Economics • Study of how we make use of our resources. • There are 4 types: • TraditionalEconomy • CommandEconomy • Market Economy • MixedEconomy

26. Traditional Economy • Ways to produce products are passed from one generation to the next • Parents teach children how to produce goods and services. • Children then pass those skills onto their children. • Example: hunt, weave baskets and create jugs to carry water

27. Command Economy • Government owns most resources and makes most of the economic decisions • Government determines prices, styles, colors and even amounts of products produced. • 2 Types: • Socialism: System based on public or collective ownership of the means of production. • Workers efforts are valued • Communism: System based on communal ownership and the absence of class. • Working class is exploited by the ruling class • Examples: China, Cuba, North Korea

28. Market Economy • People, rather than the government, own the resources and run the businesses. • Businesses are free to choose which products to produce and how to produce them. Set own prices. • Purpose is to earn a profit • Profit= Price-Cost

29. Mixed Economy • Mixture of a market economy and a command economy. • United States is a Mixed economy • US Government sets limits on what some businesses and individuals may do • Sets rates public utility companies can charge consumers • Cant discard hazardous waste in rivers • Business cant make false claims about their products

30. WHAT IS SCARCITY? • Occurs when consumers wants are greaterthan resources available to satisfy those wants. • People cannotobtain as much of something as they want, without making sacrificeor bearing a cost. • Scarcity defines a relationship – between the amount of something we wantand the amount that is available.

31. WHAT IS SCARCITY? • SCARCITY NECESSITATES CHOICE; THEREFORE TRADE-OFFS CANNOT BE AVOIDED • Hey guys... check out these ipads I found… Does anyone want one? • How should we solve this DILEMMA?

32. WHAT IS A TRADE-OFF? • Trade-off is a choicebetween alternativesthat reveals the opportunity cost of selecting one alternative over the other.

33. WHAT IS OPPORTUNITY COST? • Opportunity cost is the most highly valued sacrificed alternative; the value of the “next-best” choice.

34. Demand • Quantity of goods and services that consumersare willing and able to buy at various prices during a given time period. • Law of demands states that consumers will purchase more of a product at a lower price than a higher price.

35. Demand Example • Tacos are $1 and you choose to buy 4 tacos a week. • Your demand for tacos would be 4 per week. • What happens if price increases to $2 per taco? • You may only buy 2 tacos per week. • Demand for tacos may go down as prices increase

36. Supply • Quantity of a product that producers are willing and able to make available for sale at various prices over a given time. • Law of supply says that producers are willing to offer more of a product for sale at a higher price than a lower price. • When prices rise, quantity supplied increases

37. Equilibrium • Price at which the quantity supplied equals quantity demanded of that product. • At equilibrium price, consumers are willing and able to buy the same amount of products as producers are willing and able to supply. • How much are you, the buyer, willing to pay? • How much are you, the seller, going to charge? • Come to an agreement

38. Equilibrium Price Demand= Negative Slope Supply= Positive Slope

39. Surplus vs. Shortage • Surplus is when the quantity of products exceedthe amount demandedby consumers. • Shortage is when consumer demand moreproducts than producers are able to produce.

40. Critical Thinking • Read the pet shop scenario and answer the 2 questions that follow.

41. Utopia

42. Story Of Atlantis • Greek Mythology • Poseidon, the god of the ocean and waters received this island of paradise. • The first king of the island was Atlas which was Posiedon’s son…. Naming the Island Atlantis. • The people of Atlantis, for the first few generations, obeyed laws and Poseidon.

43. Story Of Atlantis Continued… • But as the divine nature of Poseidon was getting more and more diluted in them, they began loosing their pure spirit and engaged in pursuing wealth and power. This invoked the wrath of Zeus, the king of all Greek gods, who decided to punish the unrighteous people of Atlantis. Here the story ends, either because it got lost or because it was never finished. All we know is that the island and its whole culture disappeared under the ocean and has been lost ever since.

44. Story Of Atlantis Assignment • Think about the type of society you would like to establish and the needs of your colony. • Study the list of applicants • You can only take 15 people with you • You must choose 1 person from each cluster • There must be an equal number of men and women (8 and 8 including you) • Think about the type of economy you want to have • Tradition • Command • Market • Mixed • Make a List of tools, supplies, etc that you would need and want to take with you for the 2 year period.

45. Bell Ringer 2Story Of Atlantis Questions • What challenges did you face in being the “leader” of this colony? • What strategies did you use in deciding who you should “pick” or take with you. • Was it easy to determine laws that should be used on the island?

46. Making Decisions In A Market Economy Chapter 1.4

47. Market Economy • Consumersare free to buy • Producersare free to sell • Both parties get what they want

48. Information For The Economy • Merchant • Retailer • Manufacturer • Person who makes the merchandise for stores • When the quantity is low, retailers receive more product from manufacturer.

49. Consumer • Anyone who buys or uses products • EVERYONEis a consumer! • Consumer Economics • The study of the role consumers play in an economic system. • Consumer Sovereignty • To be in charge • Consumers choices determine what goods and services are produced.

50. Competition • Contest among sellers to win customers. • Competition exists when several companies offer similar products for sale. • Example: Apple iPhones. • AT&T, Sprint, Verizon