Bell Ringer
•What do you hope to get out of this class?
Pre-test!
•Once you are done with your pretest pick up
a textbook from the back of the room and
check it out with Ms. Edlund.
Extra Credit
• State of the Union – By Friday
• 1 paragraph (5 sentences) summarizing what the
President said in his speech.
• https://www.youtube.com/watch?v=Z8LqG_Ld0Dw
• YouTube – State of the Union 2015 (New York Times)
Bell Ringer
• What is economics?
• Economics is the science that studies the choices of
people trying to satisfy their wants in a world of scarcity.
Introduction to Economics
• Scarcity – the condition in which our wants are
greater than the resources available to satisfy those
wants
• Want – a thing that we desire to have
• Resource – anything that is used to produce goods or
services that fulfill our wants
Scarcity
• Wants are unlimited, resources are limited.
• Scarcity exists so people need to make choices.
Making Choices
• Opportunity Cost – the most highly valued
opportunity or alternative forfeited when a choice
is made.
• Every choice has costs
Opportunity Costs
•WHY?
Why Didn’t Chris Rock go to College?
• Read about Chris Rock on page 9.
• What were Chris’s choices?
• What was the opportunity cost of his choice?
• Think about it:
• What will be your opportunity cost for going to
college?
• What will be your total costs, including opportunity
cost, for going to college?
Bell Ringer
• What is opportunity cost?
• Opportunity Cost – the most highly valued opportunity or
alternative forfeited when a choice is made.
Bell Ringer
• What is scarcity?
• Wants > Resources
Production Possibilities Frontier
• A graphic representation of all possible
combinations of two goods that an economy can
produce.
• Choice and the PPF
• Scarcity and the PPF
• Opportunity Costs and the PPF
PPF
• You are becoming a producer of triangles or
squares.
• Instructions:
• Cut out and Glue together the Resource Strip.
• Decide if you would rather produce squares and/or
triangles.
• Cut out the individual squares or triangles you decide to
produce.
PPF and Scarcity
• The Production Possibilities Schedule represents all the
production alternatives that are possible.
• The Curve itself shows the scarcity with in society.
• There is a limit to what we can produce with our given resources.
• Remember that scarcity is the condition where there are not
enough resources to satisfy all of our wants.
PPF and Choice
• How many triangles did you produce?
• How many squares were you able to produce?
• A society has to choose how many squares and
triangles to produce.
• With our resources we can’t produce unlimited amounts of
both squares and triangles.
PPF and Opportunity Cost
• Because society has to choose what to do with our
resources, we experience opportunity costs.
• What is the opportunity cost of producing your first
square?
• Graph the production point of 6 triangles and 3 squares. Is
this point possible?
• Graph the production point of 4 triangles and 1 square. Is
this point possible?
• Is it desirable?
PPF
• Graph the following PPF
Possibilities
# of Squares
# of Triangles
A
0
12
B
1
10
C
2
8
D
3
6
E
4
4
F
5
0
• What could have caused the PPF to shift outward?
Homework
• Scarcity and PPF Packet
• Due Tuesday
Bell Ringer
• Graph the following
Production Possibilities
Schedule and use it to
answer the question.
Guns
Butter
0
15
2
12
4
9
6
6
8
3
10
0
• If the economy is currently
producing 8 units of guns and
3 units of butter, what is the
opportunity cost of
increasing the production of
butter from 3 units to 9
units?
• 4 Units of Guns (move from 8
to 4 units)
Quick Review
• How does the PPF illustrate the concepts of scarcity,
choice, and opportunity cost?
• Can an economy produce at a point outside of the
PPF? Why or why not?
• Can an economy produce at a point inside of the
PPF? Why or why not?
PPF
• Graph the following PPF
Possibilities
# of Squares
# of Triangles
A
0
12
B
1
10
C
2
8
D
3
6
E
4
4
F
5
0
• What could have caused the PPF to shift outward?
Quick Review
• How does the PPF illustrate the concepts of scarcity,
choice, and opportunity cost?
• Can an economy produce at a point outside of the
PPF? Why or why not?
• Can an economy produce at a point inside of the
PPF? Why or why not?
• How can a PPF get pushed outward?
Thinking Economically
• It is the way an economists looks at the world.
• In terms of choices and opportunity costs
• “Most of economics can be summarized in four
words: People respond to incentives.”
• Steven Landsburg
• Incentive
• Something that encourages or motivates a person to take
action
Thinking Economically
• Freakonomics: Can a Ninth Grader be Bribed to
Succeed?
• While you watch the documentary complete the
worksheet to use in a discussion.
Bell Ringer
• What is an incentive?
• Something that encourages or motivates a person to take
action
Incentives
• Different types of incentives:
• Financial – monetary benefit
• Moral – do what you believe is right
• Social – social approval
• Negative and Positive Incentives:
• Positive Incentive – encourages a behavior
(REWARDS)
• Negative Incentive – discourages a behavior
(PENALTIES)
Resources
• Also called the “factors of production” they are
what people use to make goods and services.
• Goods – anything that satisfies a person’s wants; tangible
• Services – tasks that people pay others to perform for
them; intangible
Resources
• Land – all the resources found in nature
• Renewable – those that can be drawn on indefinitely
• Nonrenewable – those resources that can not be replenished
• Labor – the physical and mental talents of people
• Capital – produced goods that can be used as resources for
further production
• Physical – tangible, human-made resources
• Human – intangible, knowledge or skills a worker gains through
education and experience
• Entrepreneurship – the special talent that some people have
for searching out and taking advantage of new business
opportunities and for developing new products and new
ways of doing things
Homework
• “Homework Exercise: Production Possibility
Frontier” and p. 12 - # 2, 6, 7 and p. 27 - #3, 4, 5
• Due tomorrow
• Chapter 1 Quiz!!
• Come with questions about the homework