Transcript Economics - Hackettstown School District

ECONOMICS
CSI – UNIT 1 – 2015
WARM UP
With a partner:
 What is economics?
 Why do we trade (buy & sell) goods and services?
 What are the most bizarre goods and services you have
seen sold or advertised?
DEFINING ECONOMICS
 Study of production, distribution, & consumption of material goods and services
in a society
 Purchases
 Jobs
 International Trade
 Inventions
 Capital
 Labor
 Industries
 Stocks
TRADE
 To exchange something you have
for something someone else has
 WHY? To obtain something we
need or want & we have something
they need or want
 Both sides benefit, even if trade
seems unfair
 Little Brother Example
 Backbone of economics
MARKETS
 Places where things are bought and
sold
 Black Market Items
 Human organs
 South Africa – kidneys - $100,000
 Albino people?
 Basic unit of economics
 Not always open
 Capitalist society = items sold openly
on the street or in stores
 Black Markets / Underground Markets
in place to avoid government
restrictions
 Animal Organs
 Bear Gall Bladder - $30,000
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Weapons
Alcohol
Tobacco
Counterfeit Medicine
Prostitution
SCARCITY
 Limited resources,
but unlimited wants
 Investopedia Video
Clip:
http://www.investo
pedia.com/terms/s/s
carcity.asp [1:35]
SUPPLY & DEMAND
 Supply = how much there is
 Demand = how much is wanted
 Quantity demanded is high when the
price is low
 Quantity supplied is high when price
is high
 Economists try to determine the
equilibrium price where demand =
supply
 Both shortage & surplus are not good
SUPPLY & DEMAND
 Limited resources in the world
 Markets are driven by supply & demand set a price to regulate how much of the resources are
consumed
 Consider:
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Why is a DVD player inexpensive, but a Blu-Ray player expensive?
Why do people pay $20, $50, or $100 for Legos?
Why does college cost so much today?
Why are athletes paid so much?
Why are the women’s US soccer team paid less than the men’s soccer team?
Why is food so cheap today?
SUPPLY & DEMAND ACTIVITY
With a partner:
 Name 5 items that have changed in price because of
fluctuating supply & demand
 Example: Beanie Babies – formerly a huge demand &
limited supply, now a huge supply & limited demand
OPPORTUNITY COST & COMPARATIVE
ADVANTAGE
 Opportunity Cost = what you give up for something else
 Example: The opportunity cost of going to college is whatever money you’d have made if you
went to work for those few years
 Comparative Advantage = when you can produce something at a lower cost than anyone
else
 Undercuts protectionism & mercantilism
 On the Principles of Political Economy & Taxation, David Ricardo, 1821: “TO produce wine in
Portugal, might require only the labour of 80 men for one year, and to produce cloth in the same
country, might require the labour of 90 men for the same time. It would therefore be
advantageous for her to export wine in exchange for cloth.”
 Opportunity cost, comparative advantage, & scarcity ALL contribute to decision-making
EXTENSION ACTIVITY: PROM PLANNING
 Your class has been engaged in various fund-raising projects during the past
several years, and you now have a total of $9,635 to spend on a big bash - your last
school dance. You may not spend more than this amount on the dance, but you do
not have to spend all of it on the dance. Any money "left over" can be used for a
class project, designed to help your school or community.
 You have decided that there are three categories of expenditures for the dance.
 1) hiring a band
 2) renting a place to hold the dance
 3) providing refreshments and decorations