What is Economics?
Ch. 1
MASON EDUCATION
Table of Contents
1.
Bell Journal
2.
Lecture Notes
3.
Factors of Production:
4.
HW: Sect 1-3
5.
Decision Making Grids
6.
Opportunity Cost Handout
Bell Journal
Ch. 1 What is Economics
Sec.1 Scarcity and the Factors of Production
Pg. 3

Sect 1 Objectives:
SWBAT
1.
Explain why scarcity and choice are basic problems of economics
2.
Identify land, labor and capital as the three factors of production, and
identify the two types of capital
3.
Explain the role of entrepreneurs
4.
Explain why economist say all resources are scarce
1:Scarcity and the Factors of
Production: Hook
https://www.youtube.com/watch?
v=6o6Hh6tQj2w
1:Scarcity and the Factors of Production
Why scarcity?

The world has billions of greedy
humans with unlimited needs and
wants
Why Economics?

People, cities, governments and the
world must chose how to satisfy
their needs and wants
1:Scarcity and the Factors of Production

Their will always be scarcity. Goods
and services are scarce because
they are made from resources that
are scarce.

Scarcity v. shortage
 Scarcity
is nature
 Shortage
is usually based on choice
over money. Shortage can be long term
or short term.
 Ex.
Strikes, wars, droughts
1:Scarcity and the Factors of Production

The factors of production
are used to create goods
and services.
Factors of Production:

Land

Labor

Capital
 Physical
 Human
1:Scarcity and the Factors of Production

Entrepreneurs bring together
the factors of production to
create a good or service. You
can be a entrepreneur!

Scarce Resources example
 My
Fries: Pg. 6
 Identify
the factors of
production in creating French
fries
Bell Journal
What
sacrifices have you
made for your future
success?
2:Opportunity Cost

Sect 2 Objectives:
SWBAT

Describe why every decision involves trade-offs.

Explain the concept of opportunity cost.

Explain how people make decisions by thinking @
the margin
2:Opportunity Cost

Choice you make has a trade off or
alternatives. You give up those trade
offs when you make a decision over
another.

Individuals, businesses and countries
all have trade offs they give up over
another when making economic
decisions

Guns or Butter?
2:Opportunity Cost
 Opportunity
Cost is the most
attractive alternative you chose to
give up for your chosen option
 Decision
making grids can help
provide a visual element to lay out
your options to make the best
economic choice.
 Pg.
10 Karen’s Grid
2:Opportunity Cost
 Thinking
at the margin is a great
way to get a deeper understanding
on your next move.
 Making
decisions based on time or
money can require adding one unit
or subtracting one unit, this is
thinking @ the margin
2:Opportunity Cost
 Comparing
opportunity cost and
benefits at the margin help people,
business and governments make
important economic decisions.
 Also
called Cost/benefit analysis
 Sacrifice
 Once
v. Gain
opportunity cost outweighs
benefit no more units should be added
Gary Becker
Social Connection: Love, Marriage and
Economics

Answer questions below in 2-3 sentences
1.
Do you know anyone that makes relationship
decisions based on economics
2.
How do you think you might use economics to
find your future husband/wife?
2:Opportunity Cost
 Create a
 “Decision Making Grid” &
 “Decision Making at the
Margin”
 Chose
a decision you have to
make or have already made.
Follow the examples on pg.
10-11
Bell Journal
1.List
the trade
offs and
opportunity
cost for taking
a date to the
prom?
Hook

https://www.youtube.com/watch?
v=tW4G5IPpzFY
What
information
does a PPC
provide?
INTRO
3:Production Possibilities Curves

Interpret a production possibilities curve

Demonstrate how production possibilities curves show
efficiency, growth, and cost

Understand that a country’s production possibilities depend on
its available resources and technology
3:Production Possibilities Curves
 Economist
often use graphs to
analyze the choices and tradeoffs that people make.
 Graphs
help us see how one
value relates to another value
A
production possibilities curve
shows alternative ways to use an
economy’s productive resources.
3:Production Possibilities Curves
Drawing a Production Possibilities
Curve

Chose two goods or services to
examine

Place one good or service on the
vertical axis & one good or service
on the horizontal axis.
3:Production Possibilities Curves

Points are plotted along the graph to
show the comparison amount of goods
or services chosen to produce.

The line that connects the plotted
points represents the Production
Possibilities Frontier showing

combination production

trade-off
3:Production Possibilities Curves
 Production
Possibilities
Curves provide
information on:
 Efficiency
 Maximum
production
 Underutilization
 Growth
 Cost
3:Production Possibilities Curves
Resources and technology

Economist must assess each
country’s level of technological
know-how,

A country’s production
possibilities depend on both
technological level and the
resources it has available.
Outline your Graph

Create a graph outline

Identify and label the different
parts of a production possibilities
curve
1.
Vertical and horizontal Axis
2.
Good or services
3.
PP Frontier
4.
3 Plotted point