Economics - slhistory
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Transcript Economics - slhistory
Economics
What resources were used to produce this car?
Resources used to produce car
How would you classify these?
Steel
Rubber
Glass
Car designer
Engineer
Factory workers
Supervisors
Plastic
Leather
Thread
Machines/industrial robots
Electricity
Factory building
Land for factory
Owner of company/CEO
Other workers
Wood for paneling
Economic Resources
Factors of Production
Natural Resources
Land, rain, forests, minerals, etc.
Labor
work
Capital
Capital goods (tools, machinery, and
buildings)
Entrepreneur
Individuals who start a new business
Economic Choices
Economics
The study of how we make
decisions in a world where
resources are limited.
Need
Things we need for survival.
Want
Things we would like to have
Scarcity
Fundamental economic
problem.
We don’t have enough
resources
The Economic Questions
What to produce?
How to produce?
For whom to produce?
Being an Economically Smart Citizen
You must stay informed. Understanding your
Incentives: rewards
offered to try to
persuade people to take
certain economic
actions.
Examples???
role:
Market Economy: Type of
economy US has.
It is participatory
Capitalism: Citizens own
most of the means of
production.
Free Enterprise:
businesses compete for
profit with a minimum of
govt interference.
Features of Capitalism
Capitalism: an economic
system in which private
citizens own and use the
factors of production to make
a profit.
Free Enterprise: an economy
in which competition is
allowed to flourish with a
minimum of gov’t
interference
Consumer Sovereignty: the
consumer is the ruler of the market
Private Property Rights: free to
own and use our own property
Competition: struggle b/t buyers
and sellers to get the best products
at the lowest prices
Profit: money left over after all
costs of productions have been
paid.
Profit Motive: driving force behind
free enterprise.
Voluntary Exchange: the act of
buyers and sellers freely and
willingly engaging in market
transactions.
4 factors of Productions Posters
How does the entrepreneur make decisions about
how much of a resource to use to make a product?
Which factor in your poster is the most important &
why?
Which factors are the least important to production?
Which factors have the cheapest cost toward your
production? Why?
The most expensive? Why?
Circular Flow of Economic Activity
Market: location that allows buyers and sellers to exchange
Factor Markets: where productive resources are bought and
sold
Product Markets: where producers offer goods and services for
sale.
Circular Flow Model
Basic Economic Decisions
Which goods & services should be produced and in what
amounts?
How should goods & services be produced?
Who will get the goods & services that are produced?
Quantity: amount to be produced
Ex: farmer’s land, seeds, crops, labor, machinery
Technology revolutionized production process
Activity!
Partner up with someone near you.
Ask each other the following questions and record your answers:
Suppose you have just bought 100 acres of land, what is the first economic
question you should ask yourself?
Would you plant all or any of the acreage? One crop or more than one?
Will you use organic methods or conventional fertilizers & pesticides?
Will you do all the work yourself or hire help?
Will you rely more on workers or machinery?
Will you buy the farm machinery or rent
Will you manage the farm yourself or hire a business manager?
Trade-offs
Trade-offs
Exchanging one thing for the
use of another
Opportunity Cost
What you cannot buy or do
when you choose to do or buy
one thing rather than another.
Examples:
Costs
Fixed Costs: expenses that are
the same no matter how much
is produced.
Example:
Variable Costs: expense that
change with the number
produced.
Example:
Marginal Costs: extra cost of
producing one additional unit.
Marginal benefit: additional
benefit associated with an
action.
Cost Benefit Analysis
Economic model used to compare marginal
costs and marginal benefits
You want to choose an action when the
benefits are greater than the cost.
The Economy and You
Consumer Rights and
Responsibilities
Consumerism: movement to
educate buyers
Laws that protect consumers
Examples:
Warranty: a promise made by a
manufacturer or seller to repair
or replace a product if it is
faulty.
Your Role as a Consumer
Disposable Income: money
after taxes
Discretionary Income: money
after paying bills.
What are your goals???
Saving: money set aside for
later use
Interest: payment when you
lend your money.
Gross Domestic Product (GDP)
GDP: measure of the size
Standard of Living:
of the economy.
Total dollar value of all FINAL
goods and services
Does not count intermediate
goods or used goods
Expressed in terms of money
Increase in GDP-economy is
expanding
Decrease in GDP-economy is
declining
Quality of life based on the
possession of necessities and
luxuries that make life easier.
Does not measure society’s
overall health of the
economy.
Productivity and Growth
Productivity: the measure of the amount of output
produced by a given amount of input.
Specialization: Specialize in one good/service
Division of Labor: dividing the tasks of making a
product.
Economic Interdependence: depending on others for
the things we can’t provide ourselves.