today’s agenda
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Today’s Agenda
Warm-upCheck signaturesScarcity ActivityNotes Factors of Production Chart
HW – NOTEBOOK CHECK THURSDAY!
Economics – What is it??
Essential Questions:What is Economics?
Why is Scarcity the basic economic problem?
Definition
Economics is:Study of human efforts to satisfy
unlimited wants
What does this mean in your own words?
The Problem:
The basic economic problem that ALL societies face is scarcity.
Scarcity – result of not having enough resources to produce all the things people would want
Needs vs. Wants
What is a need?Basic requirement for our survival
Ex: Water, food, clothing, shelterWhat is a want?
A way of expressing a needEx: wish for, crave, desire
TINSTAAFL
Is anything really “free”?TINSTAAFL = “There is NO such
thing as a free lunch”Even if YOU are not paying,
somebody paid for the production of it
Coupons – is this really free?
3 Questions of how to use limited resources.
WHAT to produce? Society can’t have everything it
wants, so it must decide what to produce
Example – Should the U.S. worry about making more military weapons or more food/shelter to take care of the homeless?
3 Questions of how to use limited resources.
HOW to produce?What method will be used to
produce things?Should factory owners use more
machinery and less workers or more workers and less machinery?
3 Questions of how to use limited resources.
FOR WHOM to produce?Who will receive the existing
items/supplies? Who is it allocated to?
Today’s Agenda 9/10
Warm-upNotebook CheckReview Factors of ProductionGoods/Services NotesVocab Activity
Goods
Good An item that is economically
useful (satisfies a want)
Goods
Consumer Goods Intended for final use by individualsExamples: Ipods, Cell Phones
What are some items around the class that would be consumer goods?
Goods
Capital Goods Manufactured goods used to produce other
goods and servicesExample: an oven in a bakery
Services
ServiceWork that is performed for someoneEx. Barber
What are some examples of a service we see in our everyday lives?
Values
Value is a worth that can be expressed in dollars and cents.
The PARADOX OF VALUE – When necessities have little value, and non-necessities have much higher value.The current price of gold is $993 per ounceThe current price of water is $ 4.50 for 12
bottles
How is Value calculated?
Value = Scarcity + Utility
Scarcity means…..
Utility - the ability to be useful or provide satisfaction
How does gold, diamonds, and other jewels fit into the paradox of value?
Wealth
Wealth is:The accumulation of products that are
tangible, scarce, useful, and transferable.
Wealth is the accumulation of many things that have VALUE
Who do you consider to be wealthy?
Today’s Agenda
Circular Flow of Economic Activity ChartActivity
Critical Thinking QuestionsProject Assignment
Essential Questions
How do consumers and businesses interact with each other in the economic flow of activity?
Circular Flow of Economic Activity
___________________Markets
Examples:
___________________Markets
Examples:
Businesses Individuals
__________Income
_________ Spending
Income from ___________
Payments from _____________
Goods _________
Land_________
Labor _________
__Goods___________
Buy ___________________
• Businesses – the companies providing goods and services
• Individuals – the consumers (people, us) that want to buy/use the goods and services
Markets
• Product Market (top box)– where businesses sell their goods and services to consumers– Individuals spend their money in product
markets and get goods and services– Businesses get INCOME from consumers
buying goods and services
ProductMarkets
Businesses Individuals
BusinessIncome
ConsumerSpending
Income from ___________
Payments for
Goods and
Services
Land_________
Labor _________
Goods and
Services
Buy ___________________
Markets
• Factor Market (bottom box)- where productive resources are bought and sold- businesses hire labor for wages/salaries, get
land, etc. - PAYMENTS for resources (Factors of Production)
- Individuals get INCOME from working in factor markets
ProductMarkets
Factor Markets
Businesses Individuals
BusinessIncome
ConsumerSpending
Income from
Working/resources
Payments for
Resources
Goods and
Services
LandCapital
Labor Entrepre
neurs
Goods and
Services
Buy
Productive
Resources
Critical Thinking Question
• Answer the following question and hand in when completed– As a consumer, what role do you play in the
circular flow of economic activity?
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