Economics

1. Economics Day 2 – Thursday, August 4th

2. Opener: August 4th Pick up your opener on the table and then answer the following writing prompt: • When you hear the word economics, what are the first ten words that you think of? Write them down and wait for further instructions. • When I say “Go”, compare your list with those of your classmates. • Do the words do you have in common?

3. How Much Would you pay?

4. Big Economic Idea – Scarcity • Because we have unlimitedwants and very limitedresources we will ALWAYS have scarcity. • No matter how wealthy someone is – they always wantmore • Scarcity is relative: • what is precious/valuable (i.e. scarce) to you may not mean anything to someone else • Timing • Needs

5. Wants vs. Needs To understand scarcity we need to remember the difference between wants and needs: Need Things we need for survival – air, food, water, shelter, cloths (not cell phones!) Wants Things we desire but are NOT essential for survival. (yes – that’s a cell phone!)

6. Scarcity and Choice • Because our limitedresources won’t allow us to have everything we want/need, we have to make choices.

7. Economics • Economics is the study of how we try to satisfy our needs and wants by makingchoices. • Because people act: • individually, • in groups (such as businesses) and • through governments economists study each of these groups.

8. Economics Day 3 – Monday, August 8th

9. Connecting Themes in Economics • Each of the six content units in this course will connect to four main themes. • Scarcity – The effect of limited resources on making charges. • Voluntary Exchange - The ways in which people gain from trade • Incentives - The role of incentives in making choices (Ex. Profit Motive) • Economic Interdependence - The costs and benefits of interdependency between two or more individuals, businesses, and/or nations

10. What is Economics? • The study of Money? • The study of the economy? • The study of choices? • Economics is the study of how individuals and nations make choices about how to use their scarce/limited resources to fill their unlimited needs and wants. • Microeconomics- Deals with individual units of the economy. • Individual Units can mean a person, a family or a community • Macroeconomics- Deals with the economy on a national or global level

11. Scarcity:Basic Economic Problem • When our wants and needs exceed our resources we have the basic economic problem of… • Scarcity

12. SCARCITY – LIKE DEATH & TAXES – INESCAPABLE! No matter how much money we have, we always want more. Yes, we always want more. E. Napp

13. Scarcity:The basic economic problem • Unlimited needs and wants with limited resources. • Primary needs include air, water, food, shelter, clothing, sleep. • Secondary needs are called wants which include cars, Abercrombie, jewelry. • Intangible needs include love, peace, happiness, pain.

14. Who makes the decisions? • Consumers- make decisions on what to buy • Producers- make decisions on what to produce Possible products fall into two categories: • Goods- physical objects to purchase • Services- actions/activities performed for a fee

15. resources Anything that people use to make or obtain what they need or want is called a…resource. • In economics, resources are sometimes called inputs. • Resources that can be used to produce goods and services are called FACTORS OF PRODUCTION.

16. Factors of Production • Factors – in math it’s one number multiplied by another number • In economics, it’s one resource that is added to others to create things consumerswant. • Economicresources are the goods or services available to individuals and businesses used to produce valuable consumer products

17. 4 Factors of Production • Natural Resources – anything provided by Mother Nature • This includes not just land, but anything that comesfrom the land. Some common land or natural resources are water, oil, copper, natural gas, coal, and forests. • Land resources are the rawmaterials in the production process. • These resources can be renewable, such as forests, or nonrenewable such as oil or natural gas. • The income that resource owners earn in return for land resources is called rent.

18. 4 Factors of Production • Natural Resources • Human Resources /Labor - people’s physical and intellectual value • Labor is the effort that peoplecontribute to the production of goods and services. • Labor resources include the work done by the waiter who brings your food at a local restaurant as well as the engineer who designed the bus that transports you to school. • It includes an artist's creation of a painting as well as the work of the pilot flying the airplane overhead. • If you have ever been paid for a job, you have contributed laborresources to the production of goods or services. • The income earned by labor resources is called wages and is the largest source of income for most people. 

19. 4 Factors of Production • Natural Resources • Human Resources - • Capital resources - are goods produced and used to make other goods and services. • Think of capital as the machinery, tools and buildings humansuse to produce goods and services. • Some common examples of capital include hammers, forklifts, conveyer belts, computers, and delivery vans. • Capital differs based on the worker and the type of work being done. • The income earned by owners of capital resources is interest.

20. 4 Factors of Production • Natural Resources • Human Resources • Capital resources  • Entrepreneurship – • An entrepreneur is a person who combines the other factors of production - land, labor, and capital - to earn a profit. • The most successful entrepreneurs are innovators who find new ways produce goods and services or who develop new goods and services to bring to market. • Entrepreneurs thrive in economies where they have the freedom to startbusinesses and buy resources freely. • The payment to entrepreneurship is profit.

21. Factors of ProductionStand and Sort • Everyone should be getting a factor of production. • Think about what type of factor of production it is and get ready to come put it on our class charts!

22. Economics Day 4 – Tuesday, August 9th

23. Production Possibilities Frontier Production Possibilities Frontier We’re conducting an experiment so I’m firing 20% of you. Keep in touch. We want to watch your behavior. Write if you get work. Really!

24. Production Possibilities Frontier Production Possibilities Frontier

25. Production Possibilities Frontier Production Possibilities Frontier Introducing… • The Production Possibilities Frontier • Featuring the following simplifying assumptions… • a society that produces only two goods • the efficient use and full employment of resources • fixed technology • a single snapshot in time

26. Production Possibilities Frontier Production Possibilities Frontier Production Possibilities Frontier

27. Production Possibilities Frontier Production Possibilities Frontier Production Possibilities Frontier

28. Production Possibilities Frontier Production Possibilities Frontier units of potatoes A 6 5 4 3 2 1 B C D E F G units of apples 1 2 3 4 5 6

29. Production Possibilities… Production Possibilities Curve The production possibility curve is a hypothetical representation of the amount of two different goods that can be obtained by shifting resources from the production of one, to the production of the other. Thecurve is used to describe a society's choice between two different goods Sometimes called the Production Possibilities Frontier https://www.youtube.com/watch?v=O6XL__2CDPU

30. Production Possibilities Frontier Production Possibilities Frontier units of potatoes A 6 5 4 3 2 1 B C D E F G units of apples 1 2 3 4 5 6

31. Production Possibilities Frontier Production Possibilities Frontier units of potatoes A 6 5 4 3 2 1 Constant Cost B C D E F G units of apples 1 2 3 4 5 6 One unit of apples costs one unit of potatoes. One unit of potatoes costs one unit of apples.

32. Production Possibilities Frontier Production Possibilities Frontier units of potatoes A Constant Cost 12 10 8 6 4 2 B C D E F G units of apples 1 2 3 4 5 6 One unit of apples costs two units of potatoes. One unit of potatoes costs one-half unit of apples.

33. Production Possibilities Frontier Production Possibilities Frontier units of potatoes A 6 5 4 3 2 1 Constant Cost B C D E F G units of apples 1 2 3 4 5 6

34. Production Possibilities Frontier Production Possibilities Frontier units of potatoes A 6 5 4 3 2 1 Constant Cost B C D E F G units of apples 1 2 3 4 5 6 One unit of apples costs one-half unit of potatoes. One unit of potatoes costs two units of apples.

35. Production Possibilities Frontier Production Possibilities Frontier A 6 5 4 3 2 1 units of potatoes B C D I E F G units of apples 1 2 3 4 5 6 Can this society produce at production combination I?

36. Production Possibilities Frontier Production Possibilities Frontier A 6 5 4 3 2 1 units of potatoes B C D I E F H G units of apples 1 2 3 4 5 6 Can this society produce at production combination H?

37. Production Possibilities Frontier Production Possibilities Frontier • Events that can expand production possibilities outward… • A technologicaladvance (remember – a technology is anything that makes life easier) • rail cars • refrigeration • computers • An increase in human or natural resources • population increase • new discoveries • Capitalinvestment • new factories • new infrastructure

38. Production Possibilities Frontier Production Possibilities Frontier Once upon a time on the tiny island of Nor, all of the people were involved in their daily labor - knocking coconuts out of trees, carrying them to a pick-up point, and delivering them from the pick-up point to the market. All of the people, except Frick and Frack, that is. Frick and Frack weren't feeling well on this day and were sitting, listless, under a palm tree. As they sat, Frick was, almost subconsciously, picking up palm leaves and weaving them together, in and out, in and out. Frack glanced down at Frick's work and asked, "What are you makin' there?" Frick looked down and puzzled, "I'm not really makin' nothin'."

39. Production Possibilities Frontier Production Possibilities Frontier But, actually, he had made something. It was a small mat. Frack said, "Keep going," and, pretty soon, the mat was about a square foot. The two of them pondered what could be done with this collection of palm leaves when, suddenly, Frack said, "Keep going, but start weaving the leaves tighter." As Frick progressed, the sides of the mat began to turn up, and the mat was slowly turning into a large basket. When the mat got to be about two foot in diameter, Frack said, "That should be enough." And, with that said, he began to place coconuts onto the mat - it held 18. Frack said, "Can you imagine how much easier it will be to carry coconuts with this?" Frick could imagine it!

40. Production Possibilities Frontier Production Possibilities Frontier Frick and Frack took their good idea to their supervisor, Frock, who immediately ordered that they remain under the tree and continue to make mats.

41. Production Possibilities Frontier Production Possibilities Frontier units of capital goods (mats) A 6 5 4 3 2 1 B C D E F G units of consumer goods (coconuts) 1 2 3 4 5 6

42. Production Possibilities Frontier Production Possibilities Frontier units of capital goods (mats) A 6 5 4 3 2 1 B C I D E F G units of consumer goods (coconuts) 1 2 3 4 5 6

43. Production Possibilities Frontier Production Possibilities Frontier units of capital goods Production Possibilities Frontier A 6 5 4 3 2 1 B C D E F G units of consumer goods 1 2 3 4 5 6 One unit of capital goods costs one unit of consumer goods. One unit of consumer goods costs one unit of capital goods.

44. Economics Day 5 – Wednesday, August 10th

45. Opener – Wednesday, August 10th • Good morning! • Please pick up your Opener Writing Prompt as you walk in, sharpen any pencils and get started. • While you’re writing, I will be: • Redoing seating for our updated roster (so you may need to move around a little bit) • Taking attendance (say ‘here’ when your name is called)

46. PPC Rules Any point on the PPC uses existing resources efficiently Any point outside the PPC is not realistic, attainable or sustainable given existing resources Any point inside the PPC is inefficient

47. PPC Example

48. So Can a Production Possibilities Curve Shift OuT? • Events that can expand production possibilities outward… • A technological advance (remember – a technology is anything that makes life easier) • rail cars • refrigeration • computers • An increase in human or natural resources • population increase • new discoveries • Capitalinvestment • new factories • new infrastructure

49. So Can a Production Possibilities Curve Shift IN? • Events that can reduceproduction possibilities and cause a shift: • Natural disasters • hurricanes • earthquakes • tornadoes • Wars • Reduction in resources • layoffs • rising resource prices • Inefficiency • human resources – employees sick, need training, etc. • capitol resources – equipment breaks, new technologies not used, etc.

50. Let’s Practice! If we experience improvements in robot manufacturing technology, what would happen to our PPC?