FUNDAMENTAL
ECONOMICS
SSEF1-6;SSEMI1
WHAT…Economics is daily life. Life is a
combination of the consequences of
decisions, and all decisions involve
economic thinking.
WHY. . . The word economy comes from a
Greek word for “one who manages a
household.” An efficient manager will
create a great life for its’ household.
STANDARD ONE
Standard 1: CHOICES MUST BE MADE!!!
_____ (25 Participation) Standard 1 Notes
a. Define scarcity
_____ (80 Daily) Word Wall Panels
b. Define and give examples of productive resources
_____ Word Wall Panels
_____ (50 Participation) Charlie and the Chocolate Factory
_____ (150 Daily) Scarcity Sculptures
_____ (12 Project) Running in Place Product FOP
c. Define allocation
_____ Word Wall Panels
d. List a variety of strategies for allocating scarce resources.
_____ (100 Participation) Candy Simulation
e. Define opportunity cost
_____ Word Wall Panels
f. Calculate opportunity cost given data
_____ (180 Daily) Opportunity Cost Scenario
a. Define scarcity
SCARCE RESOURSES

Scarcity – the economic condition that exist
due to limitless wants and limited
resources
 Because resources are scarce (Limited
and Desired), choices must be made
about how to allocate them
 When a choice is made about the use of
a resource, something must be given up
 The economic term for what is given up
is opportunity cost
SCARCE RESOURCES?
–b. Define and give examples of productive resources (Factors of Production – FOP)
TYPES OF PRODUCTIVERESOURCES
(FACTORS OF PRODUCTION – for a cake)

Land


Labor


Man-made tool used (mixer, spatula)
Entrepreneurship


Human work (decorator, cashier)
Capital


Natural resources (wheat, vanilla bean)
Choice to take risks and ability to effectively
organize FOP (purchasing wholesale sugar,
taking out a business loan)
Specialized resources are created for the
purpose of producing one specific product

Cake Box, Piping Bag
TYPES OF PRODUCTIVERESOURCES
(FACTORS OF PRODUCTION – for a chocolate bar)

Land


Labor


Man-made tool
Entrepreneurship


Human work
Capital


Natural resources
Choice to take risks and ability to
effectively organize FOP
Specialized resources are created
for the purpose of producing one
specific product
Scarcity Sculptures


Choose a Factor of Production
Create two sculptures that are
examples of your FOP – one
must be more scarce than the
other
Labor: Librarian v Receptionist
 Land: Africa v Asia
 Capital: Wal-Mart Grill v Industrial
Grill
 Entrepreneurship: Trump v I
Wanna Work for Diddy

GALLERY WALK

Display your work for peers

Land


Scarce Ex)
More Scarce Ex)


Labor


Scarce Ex)
More Scarce Ex)


Reason
Capital


Scarce Ex)
More Scarce Ex)


Reason
Reason
Entrepreneurship


Scarce Ex)
More Scarce Ex)

Reason
Running in Place FOP
RUNNING IN PLACE VISUAL RUBRIC

Your product
should be a Fair
Booth
Your team will create a circular flow diagram that illustrates the production process you
would like Mr. Holden to use for manufacturing his shoes. Follow the rubric below to
ensure that you earn a satisfactory Project grade.


Content
o Problem Statement – How can we as ___________, produce a
____________, so that the process of ___________ will change forever? 5
o Answers to Basic Economic Questions – What will you produce? How
will you produce it? Who is the product being produced for? 5
o Micro Economic Decision Making – identify at least (3) examples of
microeconomic decisions that must be made by economic actors in order
for your product to be produced and purchased. For example, “How much
will we pay our workers?” 9
o Macro Economic Impacts – describe how the production or consumption
of your product could be impacted by at least three of the five major
economic statistics (Inflation, Unemployment, Economic Growth,
Aggregate Demand, Aggregate Supply) 9
o Demand and Supply Schedule – Create a demand and supply schedule for
your product 10
o Demand Determinant Headlines – Write a headline using at least five
determinants of demand that either increase or decrease the demand for
your product 15
o Supply Determinant Headlines – Write a headline using at least four
determinants of supply that either increase or decrease the supply of your
product 12
o Demand Graphs – Create a graph to match one of your increasing and one
of your decreasing demand headlines 10
o Supply Graphs – create a graph to match one of your increasing and one of
your decreasing supply headlines 10
o Demand Articles – write an article that matches one of your increasing and
one of your decreasing demand headlines 20
o Supply Articles – write an article that matches one of your increasing and
one of your decreasing supply articles 20
o Elasticity Measures – identify at least one product that has a greater price
elasticity of demand than your product; identify at least one product that
has a lower price elasticity of demand that your product 6
o Diagram – create a circular flow diagram specific to your team’s
production method 30
Accuracy (1/2 of content points will be deducted for inaccurate information)
o The problem statement is written in the correct format and is specific to
your teams goal
o The basic economic questions are answered based on your team’s goal
c. Define allocation
d. List a variety of strategies for allocating scarce resources.
ALLOCATING RESOURCES


Allocation
 To pass out
How are resources allocated?
 Merit
 Preference of Resource Owner
 Equally
 Tradition
ALLOCATING RESOURCES –
Candy Simulation
Describe how resources were
allocated in the following ways
Merit
 Preference of Resource Owner
 Equally
 Tradition

e. Define opportunity cost
OPPORTUNITY COST


If you face the trade off of going
to a movie or going to dinner,
and choose dinner, what is your
opportunity cost?
If you face the trade off of
working or studying, and choose
studying, what is your
opportunity cost?
f. Calculate opportunity cost given data
COST FORMULAS









Revenue = Price*Quantity
Fixed Cost: do not change with
production = x * Quantity
Variable Cost: change with
production = x * Quantity
Total Cost = Fixed + Variable
Explicit Cost: Out of Pocket = x*Q
Implicit Cost: Opportunity Cost
= x*Hours
Opportunity Cost: = Explicit + Implicit
Economic Profit = TR – Explicit Cost
Accounting Profit = TR – Opp Cost
f. Calculate opportunity cost given data
OPPORTUNITY COST SCENARIO
OPPORTUNITY COST SCENARIO
Mr. Simpson works as a nuclear engineer, paid at a rate of $32 per hour. Mr. Simpson
would like to sell his custom furniture to clients from the Internet for $60. In one hour,
he can produce two pieces. To make one piece of furniture, he will purchase wood ($6),
nails ($1), sandpaper ($1), stain ($2), and paint ($3). The cost of the paint brushes,
hammer, and other tools – which he must only buy once – is $25. To start his business,
Mr. Simpson plans to withdraw $1500 from his savings on which he is currently earning
4% interest. He will also borrow $1500 from his father at an interest rate of 7%. What is
his total explicit cost? What is his total implicit cost? What is his total opportunity cost?
What is his accounting profit? What is his economic profit?
Create a scenario similar to that above and lead a discussion about the solution.
HOURS QUANTIT
WORKE
Y
D
Re
v
0
25
2
1
2
3
4
5
6
7
8
9
10
Fixe Variabl Tota
d
e
l
Cost Costs Cost
s
Explicit
Cost
Implicit
Cost
Opp Econ Acc
Cos Profi Profi
t
t
t
0
12
0
25+26+(.07*15
00)
Rev Rev
(.04*1500)(32
op ex
E+I
p
p
*1)