American Economic
Experience 8/18
 EQ:
What will I need to be successful in
this class?
 Bell
Work: Sit at your desk from yesterday
I’ll give you anything you want other than
money.
 Create a list of items that you want?
I
Will: begin to think like an economist.
What WPHS and I Expect of
You
1. Be
Prompt
2. Be
Prepared
3. Be
Polite
1.
Be NICE***
4. Be
Productive
Class Procedures
•
School wide alert signal
•
Sign out
•
Tardy log
•
Dismissal procedures
Material Needed
 One
pocket folder or 3-ring notebook with
dividers
 Blue or black ink pens
 Pencils
 Loose leaf paper
Absences and Make-Up

It is your responsibility to get all missed
class work and make arrangements to
take missed quizzes or tests.

ALL make-up work must be returned
within 3 days following the absence.
Grading
 Weighted
Categories:
 Tests/ Projects: 40%
 Assignments: 30%
 Quizzes: 20%
 Homework: 10%
Fire Drill
 Out
the door to the right
 Across
the track
Bell Work:
 I’ll
give you anything you want other than
money.
 What do you want?
 Would your list ever end?
 Why not?
 Scarcity!!!
What is Economics?
 Economics
is the science of scarcity.
 Scarcity
means that we have unlimited
wants but limited resources.
 Since
we are unable to have everything we
desire, we must make choices on how we
will use our resources.

Economics is the study of choices
Definition
Economics- Social science concerned
with the efficient use of scarce resources
to achieve maximum satisfaction of
economic wants.
(Study of how individuals and societies
deal with Scarcity)
In economics we will study the
choices of individuals, firms, and
governments.
Examples:
 You
must choose between buying
jeans or buying shoes.
 Businesses must choose how
many people to hire
 Governments must choose how
much to spend on welfare.
5 Key Economic Assumptions
1. Society’s wants are unlimited, but ALL
resources are limited (scarcity).
2. Due to scarcity, choices must be made. Every
choice has a cost (a trade-off).
3. Everyone’s goal is to make choices that
maximize their satisfaction. Everyone acts in
their own “self-interest.”
5 Key Economic Assumptions
4.
Everyone makes decisions by comparing the
marginal costs and marginal benefits of every
choice.
5.
Real-life situations can be explained and
analyzed through simplified models and
graphs.
Do you think Like an
Economist?
 In
order for something to be scarce it must
be limited and desirable
Textbook
 Be
sure to get a Principles of Economics
book to take home
American Economic
Experience 8/19
 Bell
Work: Finish your “Think Like an Economist”
activity from yesterday.
 In
order for something to be scarce it must be
limited and desirable
American Economic Experience
8/20
 Bell
Work: What does it mean for an item
to be scarce?
 What
is the difference between trade-offs
and opportunity cost?
Scarcity
 Scarcity
means that we have unlimited
wants but limited resources.
 Since
we are unable to have everything we
desire, we must make choices on how we
will use our resources.
Trade-offs and Opportunity Cost
ALL decisions involve trade-offs.
Trade-offs are all the alternatives that we give
up whenever we choose one course of action
over others.
(Examples: going to the movies)
The most desirable alternative given up as a
result of a decision is known as opportunity
cost.
What are trade-offs of deciding to go to college?
What is the opportunity cost of going to college?
Econ of College
21
The 4 Factors of
Production
22
The Four Factors of Production
•Producing goods and services requires the use of
resources
•ALL resources can be classified as one of the
following four factors of production:
Land
Labor
Capital
Entrepreneurship
23
The Four Factors of Production
Land = All natural resources that are used to
produce goods and services. Anything that
comes from “mother nature.” (Water, Sun,
Plants, Oil, Trees, Stone, Animals, etc.)
Labor = Any effort a person devotes to a task for which
that person is paid. (manual laborers, lawyers,
doctors, teachers, waiters, etc.)
24
The Four Factors of Production
Two Types of Capital:
1. Physical Capital- Any human-made resource
that is used to create other goods and services
(tools, tractors, machinery, buildings, factories,
etc.)
2. Human Capital- Any skills or knowledge gained
by a worker through education and experience
(college degrees, vocational training, etc.)
The Four Factors of Production
 Entrepreneurship=
ambitious leaders that
combine the other factors of production to
create goods and services.
 Examples-Henry Ford, Bill Gates, Inventors,
Store Owners, etc.
Entrepreneurs:
1. Take The Initiative
2. Innovate
3. Act as the Risk Bearers
PROFIT
So they can obtain _________.
Profit= Revenue - Costs
TINSTAAFL
There
is no such thing as
a free lunch
TINSTAAFL
 People
face tradeoffs
 Things always come with a Cost
 To
get one thing we have to give up something
else
Food v. clothing
 Leisure time v. work
 Efficiency v. equity
 Guns v. Butter
http://www.youtube.com/watch?v=ie1XGTYueHw
Jerry and his “free suit”

3 Basic Questions
What to Produce?
1.
1.
Where should most of societies resources go?
How to Produce?
2.
1.
2.
Machines vs. Human labor
Lower production costs vs. more jobs
For Whom to Produce?
3.
1.
2.
Who should receive the finished product?
Should resources fulfill the needs of low income,
middle income or high income
Production Possibilities Curve
 What
trade-offs are involved?
100
Units
Guns
Butter
100
Units
Production Possibilities Curve
 Represents
the point at which an economy is
most efficiently producing its goods and services
 Is
the economy allocating its resources in the
best way possible?
 Is
the economy using all of its resources (land,
labor, capital and entrepreneurs) efficiently?
Read Trade-offs, Opportunity
Costs and Production
Possibilities on pages 20 - 22
 As
you read, review the reading checks
and economic analysis questions.
Production Possibilities Curve
 What
trade-offs are involved?
100
Units
Guns
Butter
100
Units
Production Possibilities Curve
 Create
your own production possibilities
curves showing a constant, opportunity
cost, an increasing opportunity cost and
zero opportunity cost for one of your two
units.