Welcome to AP Economics

1. Welcome to AP Economics Mr. Forrest

2. Macroeconomic Topics • Basic Economic Concepts • Measuring Economic Performance • National Income and Price Determination • The Financial Sector • Inflation, Unemployment and Fiscal and Monetary Policies • International Trade

3. Grading • 50% Tests and Quizzes • 30% Class work and Homework • 20% Final Exam Students have as many days to make up missing assignments as they were absent. Let me know if you will be out for an extended period due to extra curricular activities, so we can plan make-up work.

4. Steps to Success • Complete your textbook reading on time. • Stay focused on classroom lectures and discussion. • Use a variety of outside materials to help prepare for course tests. • Let me know if you need extra help.

5. Classroom Web Page http://daveforrest.net/Economics • Use the web page to view daily assignments, print out reading guides, review classroom presentations, watch videos or use web links. • Check if you are absent to see what we are up to.

6. Be Nice and Work Hard We will have a good year in AP Econ and AP Gov.

7. First Homework Assignment • Read Chapter 1 in your textbook by Friday. • Take notes and be prepared to answer questions on Friday to see how well you read • In most college classes there will not be reading guides. Develop a good strategy for reading and retaining what you have read.

8. THIEVES • One retention strategy you might try is THIEVES • T - Title • H - Headings • I - Introduction • E - Every first paragraph • V - Visuals and vocabulary • E - End of the Chapter questions • S - Summary

9. Island Choices • Imagine you were stranded on an island after a shipwreck. You are not sure what raw materials are available on the island, but you can only take 10 of the 20 items from the ship onto land to help you survive. • Work with your partners to decide which 10 items to take. Be prepared to defend your choices in discussion.

10. Definition of economics • Economics is the study of how scarce resources are used to satisfy unlimited wants. • Resources are viewed as scarce because we never have enough to satisfy all of our wants. • Scarcity is different than the economic concept of shortage, which economists view as the temporary lack of a product.

11. Necessities and Luxuries • Necessities are goods which satisfy basic human needs. E.g. food, shelter and clothing. • Luxuries are goods which consumers want, but don’t necessarily need. • The line between these two types of goods is often determined by societal wealth and values.

12. Consumer and Producer Goods • Consumer goods are products used for immediate consumption. E.g. food, cars, toys • Producer goods are products which are used to make consumer goods. They are simple or complex tools.E.g. hammer, cranes. • Sometimes producer goods are called intermediate goods, because they are used in the production process.

13. The Production Process • Economics studies the production process, where three factors of production are combined to make consumer goods.These three factors are: • Land - natural resources such as: trees, water, minerals • Labor - mental and manual labor such as: auto workers or scientists • Capital - Factories, machines (producer goods) and money

14. Definition of economics Economics is the study of how scarce resources are used to satisfy unlimited wants.

15. Rational “self interest” • Economists believe that people choose options that give them the greatest satisfaction • People use available information, weigh costs and benefits, and make a self interested choice.

16. Microeconomics • Studies the economy at the level of individual consumers, firms, and markets.

17. Macroeconomics • Macro economics studies the economy as a whole. • Macro looks at big indicators like national economic growth, total consumption, unemployment, price levels, and international trade.

18. Positive vs. normative economics • Positive economics focuses on measurable outcomes. It does not impose value judgments or personal feelings. It views economics as a science. • Normative economics what ought to be or what should be. It makes ethical value judgments on policy.

19. Economics as a science • Do you agree that economics is a science, why or why not?

20. Approximate Costs of College

21. Paying for College • Parents • Grants • Scholarships • Work-Study • Loans

22. Trade-offs • Scarcity means there are limited resources • Individuals,companies, governments, and nations must make trade-offs on how to use scarce resources.

23. Opportunity costs • Economists describe opportunity costs as the value of the foregone good. The foregone good is the next best alternative. • For example, Apple Computer may use factory capacity to make iPods or iPhones. If the plant can produce 1 iphone for the same resources it can produce 2 iPods then: • 1 iPhone = 2 iPods • 1 iPod = 1/2 iPhone

24. Calculate Opportunity costs • If music downloads are $1 and attending a movie is $10, calculate the opportunity costs for music downloads and then, the opportunity costs for movies. • 1 music downloads = 1/10 movie • 1 movie = 10 music downloads

25. Production Possibilities Graph • A production possibilities graph shows the tradeoff between two goods • The curve is called the PPC or the Production Possibilities Curve