 Due Today, 8-20
 Youtube videos (Scarcity and Choice, Micro vs. Macro)
 Quick quizzes, Questions for Review and Problems and
Application’s
 Homework, pgs. 9, 11, 14+15
 Binder Check Chapter 1
 Chapter 1 Notes
 Chapter 1 Practice Review
 Terms Chapter 1
 Due Tuesday
 Chapter 2 Prequiz

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

Our classroom represents an economy based on a system of “haves” and “have-nots”.
Your teams’ job is to problem solve based on the scenario. Determine how to allocate the scarce resources (seats) in light of the unlimited wants of haves and have-nots. Be prepared to present and support your decisions.
Requirements:
 Each group needs a spokesperson to communicate their plan

- Your plan should address the following issues:
How do you plan to handle the lack of space? (price system, social welfare, etc.)


“Haves” – how are you going to philosophically and practically deal with the “havenots”?
(exclude /include them from society)
“Have-nots” – what do you want from the “haves”, what is the solution from your perspective?
DILEMMA

Team
Solution
Money Ballers Sweat equity, give 1 person a chair
Lincolns Lease space, custodial agreement, cleanliness standards
In the Black
Dirty Money
Servitude for the duration of the year
Barracudas Divide remaining chairs, servitude
Dough Boys/Girls Cheap labor in return for the chairs
Lease to own


1.
2.
3.
4.
5.
6.
Reflection questions (to be answered with your group, each person should have a record of their group’s responses):
How does this reflect real world conditions In our economy?
What factors prevent us from having everything that we want?
How does a market economy cope with scarcity?
How is our economy affected when resources are made easily available to all?
Why is scarcity a permanent condition in all societies?
Why is this problem not just an issue of rich/poor?

Coach L’s Idea

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 Take as many times as you want to earn credit.
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 Take twice, average of the 2 grades.

Activator Chapter 1
• During the holiday season of 1996, a children's toy appeared on Good Morning
America. The toy, produced by Mattel, had sat on the shelves with very little sales until it appeared on the show. After the toys appearance, its popularity improved and it became the most sought after product of the holiday season. Unfortunately, Mattel did not anticipate the doll’s popularity, only producing 400,000 units, and were not able provide the product in a timely manner at the store level (over 1,000,000 were in demand).


1.
What problem did each of the following face?
The Consumer – You and I
2.
The Stores – Babies R Us, Toys R Us, Wal-Mart, etc.
 How would you have dealt with the situation as an individual consumer?
 Imagine you are the owner of a toys store.
Knowing how bad this was for business, what could you have done for the customer to accommodate the shortage?

http://www.youtube.com/watch?v=lzwgL1-IyIU http://www.youtube.com/watch?v=xFCcN146WBw&list=PL0D79F5BDE2224AFA

Unit 1: Basic Economic Concepts
CHAPTER 1 – The Ten Principles of Economics


Scarcity - fundamental problem facing all people; unlimited wants but limited resources to satisfy those wants
The Basic Economic Problem:
 Humans' wants and needs are infinite, while the resources needed to satisfy those wants and needs are limited and scarce.

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

What makes something scarce?
Scarcity
Something is scarce when it is both limited and desirable
 e.g. - Lebron James, oil, time, rest, grass in the winter (north) etc.
Scarcity applies to everyone; no one can have an endless supply of everything

How to Allocate(distribute)
Scarce Resources
Who gets scarce stuff?

 http://www.youtube.com/watch?v=ni7a9SBOeL
E&list=PL0D79F5BDE2224AFA&index=2
 http://www.youtube.com/watch?v=fMU9nUD9k
S4&list=PL0D79F5BDE2224AFA

 List three things that you feel are scarce in your life.


Economics – the study of choices; how humans manage limited resources

“Oikonomos” (Greek) “One who manages a household”

Principle 1 – People face tradeoffs
Principle 2 – The cost of something is what you give up to get it
Principle 3 – Rational people think at the margin
Principle 4 – People respond to incentives
Principle 5 – Trade can make everyone better off
Principle 6 – Markets are usually a good way to organize economic activity
Principle 7 – Governments can sometimes improve market outcomes
Principle 8 – A country’s standard of living depends on its ability to produce goods and services
Principle 9 – Prices rise when the government prints too much money
Principle 10 – Society faces a short-run tradeoff between inflation and unemployment

Principle 1: People face trade-
 offs
Trade-off – a sacrifice that must be made to obtain one thing over another
 We always give up something to get something else

“There is no such thing as a free lunch.”

Directions: Create a 3 column chart, label it as shown below. In the second column, list 3 possible alternatives that you could have made other than your choice to come to school. In the third column, list the alternative that you would have desired the most.
Choice
Alternatives
Choices
1.
What you would have done if you didn’t come to class
1. 1. Coming to
Economics
Class
2.
3.

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Principle 2: The cost of something is what you give up to get it
Opportunity Cost – used by economists to measure the cost of decision-making; value of the most desirable alternative given up
 Next best alternative use of money, time, or resources (Highestvalued alternative forgone)
Coming to Economics Sleeping (Opportunity Cost)

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Individuals and Trade-Offs – studying one subject vs. another, college or work, watching TV or working out, et.
Parents and Trade-Offs – buy food or clothing, save for retirement or fund their children’s college education
Society and Trade-Offs – “guns or butter”, military or consumer goods

Thinking at the Margin
Slice Marginal Benefit
5
6
3
4
7
1
2
8
10
9
8
4
2
0
-2
-10

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Principle 3: Rational people think at the margin
Margin – an incremental unit, edge or border
Marginal change - small adjustments/change
Marginal benefits > Marginal costs
22

or
Alternatives
Sleep
Economics
Immediate
Satisfaction
Long Term
Benefits
Criteria
Entertaining Immediate
Financial
Benefits
Necessary for
Long-term success

or
Alternatives
Immediate
Satisfaction
Long Term
Benefits
Criteria
Entertaining Immediate
Financial
Benefits
Necessary for
Long-term success
Sleep Yes
Economics Yes

or
Alternatives
Sleep
Immediate
Satisfaction
Yes
Economics Yes
Long Term
Benefits
Criteria
Entertaining Immediate
Financial
Benefits
Necessary for
Long-term success
No
Yes

or
Alternatives
Sleep
Immediate
Satisfaction
Yes
Economics Yes
Long Term
Benefits
No
Yes
Criteria
Entertaining Immediate
Financial
Benefits
Yes
Yes
Necessary for
Long-term success

or
Alternatives
Sleep
Immediate
Satisfaction
Yes
Economics Yes
Long Term
Benefits
No
Yes
Criteria
Entertaining Immediate
Financial
Benefits
Yes
Yes
No
No
Necessary for
Long-term success

or
Alternatives
Sleep
Immediate
Satisfaction
Yes
Economics Yes
Long Term
Benefits
No
Yes
Criteria
Entertaining Immediate
Financial
Benefits
Yes
Yes
No
No
Necessary for
Long-term success
No
Yes

or
Alternatives
Sleep
Immediate
Satisfaction
Yes
Economics Yes
Long Term
Benefits
No
Yes
Criteria
Entertaining Immediate
Financial
Benefits
Yes
Yes
No
No
Necessary for
Long-term success
No
Yes

40
41
42
43
Hours Pay
Play
$9.00
13.50
13.50
40 hours of play
1 hour playing video games
1 hour with family
13.50
1 studying economics

Thinking at the Margin
Hour Sleep Planning
6:15
6:30
6:45
- - -
15
15
- - -
15
15

Options
Benefit Opportunity
Cost

Options Benefit
1 st hour of extra study time
Grade of C on test
Opportunity
Cost
One hour of sleep

Options Benefit
1 st hour of extra study time
Grade of C on test
Opportunity
Cost
One hour of sleep
2 nd hour of extra study time
Grade of B on test
2 hours of sleep

Options Benefit
1 st hour of extra study time
Grade of C on test
Opportunity
Cost
One hour of sleep
2 nd hour of extra study time
3 rd hour of extra study time
Grade of B on test
2 hours of sleep
Grade of B+ on test
3 hours of sleep

 http://www.youtube.com/watch?v=W2hhIWbz
0Ns&feature=related



Principle 4: People respond to incentives
Incentive - something that influences a person to act; positive (reward) or negative (disincentive)

Government often tries to “dangle a carrot” to get markets to act
Law of unintended consequences - outcomes that are not the outcomes intended by a particular action
 E.g., Gasoline tax
 How do people respond? Purchasing smaller more fuel efficient cars; carpool; public transportation

 http://www.youtube.com/watch?v=iuZOAiga_
9A

Candy Rating before trade Rating after trade

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
Principle 5: Trade can make everyone better off
Specialization – focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency
Allows each country to focus on the activities that cost them the least
 People/countries can buy a greater variety of goods and services at lower cost

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Principle 6: Markets are usually a good way to organize economic activity
Market – buyers and sellers meet to exchange goods and services
Market Economy (capitalism/free enterprise) – economic decisions, what to produce, how to produce it, who to produce it for, are made through by individuals based on exchange of goods and services

Adam Smith’s Invisible Hand – natural flow of the economy based on the consumer and producer relationship (supply and demand)
Command Economy (communism)
– contrast of market economies; government officials (central planners) allocate economy’s scarce resources

 http://www.youtube.com/watch?v=EVHw_U1 v3HI
Rinkenomics

1.
2.
3.
Traditional economy – relies on habit, custom, or ritual to decided the 3 economic questions
Market economy – economic decisions are made by buyers and sellers trading freely.
Command Economies – in a centrally planned economy, the central government decides how to answer the three economic questions.

 Necklaces = 2 Starburst each
 Bracelets = 1 Jolly Rancher
 Rings = 1 Dum-Dum


Principle 7: Governments can sometimes improve market outcomes
Role of Government
 Externality - impact of one person’s actions on the well-being of a bystander


Externality
 Classic Externality -
Pollution
Enforce the rules
 Business ethics, maintain fair trade, produce public goods, fair employment, etc.

Principle 7: Governments can sometimes improve market outcomes



Market failure
 Environmental protection/pollution, public goods to free-riders, monopolies, situation in which the market on its own fails to produce an efficient use of resources etc.
Market power (monopoly)
 Ability of a single person (or small group) to unduly influence market prices
Protect Property rights
 Ability of an individual to own private property
 Own a business, home, copyright, boat, etc.



How the Economy as a Whole Works
Principle 8: A country’s standard of living depends on its ability to produce goods and services
Productivity – Quantity of goods & services produced from each unit of labor input
 2009 - US worker avg. $46,436 India was $1030
Higher productivity – Higher standard of living

How the Economy as a Whole Works
Principle 9: Prices rise when the government prints too much money
 Inflation - An increase in the overall level of prices in the economy
 Growth in quantity of money reduces the value of money
 Hyperinflation in Germany after WWI, Zimbabwe dead currency in 2009



How the Economy as a Whole Works
Principle 10: Society faces a short-run trade-off between inflation and unemployment
Long-run effect of monetary injection is inflation
Short-run effects of monetary injections
1.
2.
3.
Stimulates spending
Higher demand for goods and services
Firms
– raise prices, hire more workers, produce more goods and services
4.
Lower unemployment

The Ten Principles of Economics Poster Project
Principle 1 – People face tradeoffs
Principle 2 – The cost of something is what you give up to get it
Principle 3
– Rational people think at the margin
Principle 4 – People respond to incentives
Principle 5 – Trade can make everyone better off
Principle 6 – Markets are usually a good way to organize economic activity
Principle 7 – Governments can sometimes improve market outcomes
Principle 8 – A country’s standard of living depends on its ability to produce goods and services
Principle 9 – Prices rise when the government prints too much money
Principle 10 – Society faces a short-run trade-off between inflation and unemployment
People Face Tradeoffs
Description : individuals, businesses and households face alternative decisions that could be made, but must always give up something in order to obtain something else in light of scarce resources.
Picture : this picture represents an individual deciding between various alternatives and facing the tradeoff dilemma.
Poster Requirements:
1. Title - The Ten Principles of Economics.
2. Summary Statement
– “The Ten
Principles of Economics provide a general guide and outline to the important concepts found in economics.”
3. At least 10 pictures to represent each of the principles.
4. Label, describe and summarize picture for each of the 10 principles

Group 1
Principle 1 – People face tradeoffs
Principle 2 – The cost of something is what you give up to get it
Group 2
Principle 3 – Rational people think at the margin
Principle 4 – People respond to incentives
Group 3
Principle 5
– Trade can make everyone better off
Principle 6 – Markets are usually a good way to organize economic activity
Group 4
Principle 7 – Governments can sometimes improve market outcomes
Principle 8 – A country’s standard of living depends on its ability to produce goods and services
Group 5
Principle 9 – Prices rise when the government prints too much money
Principle 10 – Society faces a short-run trade-off between inflation and unemployment

1.
2.
3.
4.
5.
6.
7.
8.
9.
Chapter 1 Notes
Homework – Incentive Pay
Homework – Adam Smith and the
Invisible Hand
Homework – Why You Should
Study Economics
Youtube Video – Scarcity and
Choice
Youtube Video – Micro vs. Macro
Daily Tens
Chapter 1 Practice Review
Chapter 1 Terms
*Reminders – Take Ch. 2 Pre-quiz by tomorrow morning, 1-12,
11:45 am

1.
2.
3.
Choose a government program, that you think has had an unintended consequence. Explain.
Choose one of the principles of economics. Explain where you have seen this in the real world.
1.
Explain your interpretation of the political cartoon:
Illustrator’s message
2.
3.
Clues (people, symbols etc.)
Do you agree or disagree?

 http://www.youtube.com/watch?v=ixu6KuO3FY
 http://www.youtube.com/watch?v=Ml8_IQ3C nrs