Transcript Principles of Economics

What is scarcity? (Look in your notes) Why
is scarcity an important factor in
economics? (Look up the definition of
economics) How does scarcity effect the
price of goods and services? 6 Sentences
Principles of Economics
Goal 7
The learner will investigate how and
why individuals and groups make
economic choices.
Objective
7.01: Describe the basic factors of
production their impact on economic
activities.
7.02: Explain how scarcity influences
producers and consumers to make
choices.
What is Economics?
Broken down into 2 definitions
1: study of how we make decisions in a
world in which resources are limited
2: How things are made, bought, sold and
used
Micro vs. Macroeconomics
Microeconomics: Looks at the little picture.
How people and small business function in
an economy
Macroeconomics: Looks at the big picture.
How governments or whole industries or
societies function in an economy
Scarcity
Scarcity: when we do not have enough
resources to produce all the things we
would like to have
Vocabulary
Goods: tangible products that we use to
satisfy our wants and our needs
Service: Work performed by a person for
someone else
Production: The process of making
something
Gross Domestic Product (GDP): total
dollar value of all final goods and services
produced in a country during a single year
Vocabulary
Consumer: Person buying or using the
good
Producer: Person making a good
Pricing: How much something costs
Wages: Paid by the hour
Salary: Paid an agreed upon sum for all
the work

Write 3 examples each of salaried jobs and
wage jobs
Basic Economic Questions
What goods and services should be
produced?
How should the goods and services be
produced?
For whom should the goods and services
be produced?
Starting a Business
In order to start a business you must first
answer the 3 economic questions.
Get with a partner and figure out a product
to sell by using the 3 economic questions.
What impact will the scarcity of
a resource have on consumers?
A. A surplus of certain products will occur.
B. The cost of certain products will increase.
C. A desire to own certain products will
increase.
D. The purchase of certain products will
cease.
How will a scarcity of jobs
impact industrial production?
A. Production will increase
B. Production will decrease
C. Production will not change
D. Production cannot be determined
Cause and Effect Maps
What will happen to production, price,
profit if there is a scarcity of labor?
What Will happen to production, price, and
profit if there is a good orange crop in
Florida?
What will happen to Production, price, and
profit if a heavy freeze kills the orange
crops in Florida?
What is the relationship between scarcity,
production, and price?
Factors of Production
Factors of Production: Resources
necessary to produce goods and
services
1. Land (natural Resources): Resources
from nature
1.
2.
3.
Ex: Surface land, water, fish, animals,
forests, mineral deposits
Renewable Natural Resources: Resources
that grow back.
Non Renewable Natural Resources: Once
you run out, you can’t get anymore
2. Labor: nations work force
Cont..
3. Capital: Manufactured goods used to
make other goods and services.
1.
Machines, building, tools
4. Entrepreneurship: person who starts new
business, introduces new products,
improves process
1.
Important to economy b/c they provide jobs,
goods and services
Which factor of production does
each picture illustrate
Which factor of production involves
the worker and the value of his/her
time
A. Land
B. Labor
C. Capital
D. Entrepreneurship
Which factor of Production
would natural resources be?
A. Land
B. Labor
C. Capital
D. Entrepreneurship
If there is a large migration of
workers from the north to the south,
which factor of production would be
the most effected?
Land
Labor
Capital
Entrepreneurship
Factors of Production
Choose a good and figure out what factors of
production you will need to make those goods
On a sheet of paper, draw and color your good
in the center.
In each corner of your paper list your factors of
production i.e. Land in the top left corner, labor
in the top right corner, capital in bottom left
corner, Entrepreneurship in the bottom right
corner
Explain how each is used
Wants vs. Needs
Want: things we would like to have (Instant
gratification: You get reward right away)
Need: things required for survival
Trade Offs and Opportunity Costs
Trade Off: When you have to choose one
thing or another
Opportunity Costs: What it costs you to
choose one thing over another
If Mrs. Dorencamp has tickets to the super bowl on
Sunday or can go to a party and she chooses to
go to the super bowl, what is her opportunity cost?
A.
B.
C.
D.
The cost of the football tickets
The fun she will have at the party
The cost of gas to the stadium
Her friends will never talk to her again
What type of economy is the
American Economy? How can you
tell
Hint: Think about factors of production,
economic questions, consumer
sovereignty.
Goal 8
The learner will analyze features of the
economic system of the United States.
Objective
8.03: Explain the circular flow of
economic activities and how
interactions determine the prices of
goods and services.
What is a market?
Free and willing exchange of goods and
services between buyers and sellers.
What do markets have to do with
economics?
Circular Flow of Economic Activity
Circular Flow Model: shows how markets
interact
4 Sectors
Sector: Part
2 Markets
1. Consumer Sector

Factor Markets (household): where the factors
of production are bought and sold
consumers earn income (wages, salary)
Businesses buy factors of production
Circular Flow of Economic Activity
2. Business Sector
Product Markets (business): where
producers offer goods and services for
sale



Sell goods and services to consumers and
receive payment
Use payment to pay for factors of production
FOP used to make more goods to sell to
make more money
Circular Flow of Economic Activity
3. Government Sector
Made up of all 3 levels of gov’t

Revenue: income gov’t collects for public use
From taxes


Expenditure: expense or money spent
Purchases goods from product markets
Circular Flow of Economic Activity
4. Foreign Sector: all countries in world we
trade with
Buy and sell goods to and from other
countries
Economic Interdependence: we rely on
others, and others rely on us to provide
goods and services
Bellringer
What impact does government
regulation have on the circular flow
model?
4 sentences
The Market Game
The Point of the game
The Consumers with the most goods and
services wins
The Producer with the most money in the
end wins
Draw the Circular Economic Flow model
Label each interaction on your model in
the correct market
Circle your sector