EconomicsEconomics

Welcome to Class! Find a folder on the Welcome to Class! Find a folder on the front table, write your name on it, and draw front table, write your name on it, and draw a picture that represents you! a picture that represents you! (appropriate!)(appropriate!)

Getting Started!Getting Started!

Define Economics? Define Economics?

What is the study of Economics? What is the study of Economics?

What factors impact the economy?What factors impact the economy?

EconomicsEconomics

What is Economics?What is Economics?

Economics isEconomics is

Or is Economics This…Or is Economics This…

Economics is…Economics is…

The study of how people seek to satisfy The study of how people seek to satisfy their needs and wants by making choices.their needs and wants by making choices.

What is a need and want? How do we What is a need and want? How do we determine that?determine that?

Need and Wants ActivityNeed and Wants Activity

Goods and ServicesGoods and Services

Goods – Physical Objects Goods – Physical Objects Examples: Clothing, Cars, FoodExamples: Clothing, Cars, Food

Services – Actions/Activities one performs Services – Actions/Activities one performs for anotherfor another Examples: Auto Repair, Restaurants, HaircutsExamples: Auto Repair, Restaurants, Haircuts

Why don’t we have all those things on our Why don’t we have all those things on our lists?lists?

When There’s Not Enough To Go When There’s Not Enough To Go AroundAround

Scarcity = Limited resources to meet Scarcity = Limited resources to meet unlimited wantsunlimited wants

What are some of our scarce resources?What are some of our scarce resources? Money, Time, Land, LaborMoney, Time, Land, Labor

This forces us to must make This forces us to must make choices.choices.

Opportunity CostOpportunity Cost

Can we have everything that we need/want?Can we have everything that we need/want?

Opportunity Cost: What is given up to get what Opportunity Cost: What is given up to get what we want. we want.

What would be given up to get some of things What would be given up to get some of things we mentioned earlier?we mentioned earlier?

EconomicsEconomics

What was an opportunity cost for What was an opportunity cost for something you did or purchased something you did or purchased yesterday?yesterday?

C h o ice s a re C o s tly

S ca rc ity o f R eso u rce F o rces a C h o iceL im ited T im e

L im ite d M o n eyL im ite d O p p o rtu n ity

A d d itio n a l C o s tsP rice o f theA lte rna tive

O p p o rtu n ity C o s ts

Production Possibility FrontiersProduction Possibility Frontiers

Opportunity Costs for Countries.Opportunity Costs for Countries. Guns and Butter – Military goods vs. Food productsGuns and Butter – Military goods vs. Food products Example: World War II Military Production. Example: World War II Military Production.

Spending money in poverty stricken countries or Spending money in poverty stricken countries or our own. our own.

Because countries have limited resources and Because countries have limited resources and must make choices.must make choices.

This can be Graphed with a This can be Graphed with a Production Production Possibilities Curve (PPC)Possibilities Curve (PPC)

PPC – What can it do?PPC – What can it do?

Demonstrate all the possible opportunity Demonstrate all the possible opportunity costscosts

Show us how efficient economies areShow us how efficient economies are

Show whether an economy has grown or Show whether an economy has grown or shrunkshrunk

EntrepreneurshipEntrepreneurship

Entrepreneurs own and manage their own Entrepreneurs own and manage their own businessbusiness

What are the opportunity costs of being an What are the opportunity costs of being an entrepreneur?entrepreneur?

What are some advantages and What are some advantages and disadvantages?disadvantages?

EntrepreneurshipEntrepreneurshipAdvantagesAdvantages

Easy to startEasy to start You get all the profitsYou get all the profits You have full controlYou have full control Easy to stopEasy to stop

DisadvantagesDisadvantages

Fully responsible for debtFully responsible for debt Limited access to Limited access to

resourcesresources Lack of permanenceLack of permanence

Why would it be important for Entrepreneurs to shift the PPC?

Tanks

FoodUnits

20m

15m

10m

5m

0 50m 100m 150m 200m

Production Possibility CurveProduction Possibility CurveEfficiency

Inefficiency

Potential Growth

Shifting the PPCShifting the PPC

Four Ways to Shift the PPCFour Ways to Shift the PPC

More resourcesMore resources EfficiencyEfficiency TechnologyTechnology Work EthicWork Ethic

Put it into Practice

Exit QuestionExit Question

Why is it important to understand a Why is it important to understand a

productions possibility curve and how can productions possibility curve and how can

you shift the productions possibility curve?you shift the productions possibility curve?

Unlimited Wants

“Gimmie-Gimmies”

Limited Resources

“Sorry Charlies”

Scarcity

Choices

What to Produce How to Produce For Whom to Produce

Scarcity forces choices.

Choices To Be MadeChoices To Be Made

What to produceWhat to produce Trains, planes, automobiles, food Trains, planes, automobiles, food

How to produceHow to produce By hand, machine, assembly lineBy hand, machine, assembly line

For whom to produceFor whom to produce Me, you, adults, kids, dogs, cats, Bo-Bo the Me, you, adults, kids, dogs, cats, Bo-Bo the

elephant elephant