Transcript Journal Entry

Journal Entry
Please complete a journal from your
journal options from Unit 3
EQ’s:
What effects our economy?
What are the consequences of
investment decisions made by
individuals, businesses, and
governments?
Chapter 5
Economics
http://www.econedlink.org/interactives/inde
x.php?iid=87
Pair Share with these 2 questions:
1. How has a famous basketball player been good for
Cleveland's economy?
2. We now know where LeBron chose to go…not
Cleveland! Will he help his new city as much as he
helped Cleveland? Why or why not?
What are economics?
 Study of how societies decide what to produce,
how to produce it, and how to distribute what
they produce
 If all consumers could consume everything they
wanted, economic decisions would not be made
Scarcity
 BUT…all goods and
services are scarce
 Scarcity: the fact that
too few resources are
available for everyone
in the world to
consume as much as
he or she would like
Opportunity Cost
The loss associated with the best
opportunity that is passed up
If you are a greeting card company and
spend 2 million on b-day cards, you will
have 2 million less to spend on other cards
The company’s lost opportunity represents the
opportunity cost of producing b-day cards
Economic Systems
 Command Economy:
government decides what
goods and services are
produced
Types and amounts
 Market Economy: private
companies and individuals
decide what to produce
and consume
Based on competition
http://www.kplr11.com/news/kplr-richepujols-economic-impact021611,0,6812504.story
Pair Share---a new Partner with these questions
1. Consumer confidence is an economic indicator which measures the
degree of optimism that consumers feel about the overall state of the
economy and their personal financial situation. How confident people
feel about stability of their incomes determines their spending activity
and therefore serves as one of the key indicators for the overall shape
of the economy. How would Pujols leaving St. Louis impact consumer
confidence?
2. Why does one individual have so much impact on an economy?
Supply and Demand
In a market
economy, supply
and demand
determine prices
and quantities of
goods and services
Text book page 139 read together
Supply and Demand
Demand: quantity of good or service
individuals are willing to purchase at
various prices
Supply: quantity of good or service that
producers are willing to produce at a given
price
Determining Price
Price of a good or service adjust until the
amount producers are willing to produce
equals the amount consumers are willing
to consume
When supply = demand we have
equilibrium price
Determining Profits
 Fixed Costs: cost you absorb regardless of units
produced (heating, rent)
 Variable Costs: rise or fall depending on how
many units produced (labor and materials)
 Breakeven Analysis: determines how many units
of a good or service a business needs to sell
before it begins earning profit
 Breakeven Point: point at which revenue is
sufficient to cover all costs
Study the cartoon above. Which entrepreneur is in a better
position to control fixed costs if there is a decline in the
demand for AJAX bats? What if there is a decline in Al’s
handmade bats? What does this show about fixed and
variable costs?
Chapter 5
Section 2
The Business Cycle
Journal Entry
What is recession? What is
depression? Does anyone know
what the Great Depression was?
Explain.
The Business Cycle
 Expansion and
contraction by many
industries at once
 Several phases
Phases of the Business Cycle
Expansion:
Consumer and business spending strong
Unemployment declines
BUT…when prices rise so much businesses
and consumers cut back on purchases and
the next phase begins
Phases of the Business Cycle
Contraction:
Consumers and businesses reduce
purchases
Unemployment rises
Businesses and consumers pessimistic
about the future
What happens when growth falls for a
long time?
Recession: when growth falls for two three
month periods in a row
Depression: when business activity
remains far below normal for years
Economic Indicators
 Help to predict when
changes in business
cycle might occur
 Data that show how the
economy is performing
Housing loans,
bankruptcies, new orders
of consumer goods and
materials by manufacturers
(economy is likely to
expand)
What to do…
 Research Options…
 Stock Market Crash of 1929 vs. October
1987
 Famous Economists (Adam Smith, Alfred
Marshall, John M. Keynes, Milton Friedman)
 How do wars affect depression and
recession? Find 3 examples to support this.
 Write 1.5 page paper summarizing your topic