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We will…
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Role Call and Syllabus review
Economic Activity: Discovering Scarcity
Chapter 1 Notes
You will…
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Understand the course and its expectations
Have a better understanding of how scarcity and
how it connects to Economics
Understand basic concepts of Economics including
scarcity, positive and normative economics and the 7
principle of Economics
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1. Get into groups of 3 or 4
2. Scarcity Exercise
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1. How did this activity exemplify the
economic principle of scarcity?
2. What were some of the thoughts behind
choosing a preference?
3. How does scarcity affect your daily life?
Think of an example.
What you need to remember to be a
good student of economics
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Economics is…
A Social Science
 A study of how resources are used to
their fullest potential
 NOT directly concerned with money or
politics or the stock market
 When you are trying to make the most
out of what you have you are doing…
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 What
do you think is the
difference between the
prefixes “macro” and
“micro”?
 Write
in on your note sheet
 Compare
it to a partner.
 Macroeconomics
= economic
issues of a nation
 Microeconomics = economic
issues of the individual
and/or firm
 What
is an example of a
macroeconomic issue?
 What
is an example of a
microeconomic issue?
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Positive Economics
 Gives
a concrete estimate to an issue
 Focuses on facts and cause and effect
relationships
 Based on scientific method
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Normative Economics
 Uses
value judgments and opinions
 Used to find the “best option”
Positive
Economics
Normative
Economics
1.
PEOPLE CHOOSE
 Scarcity
forces people to choose 1
option over another
 Ex: Sleep or get to school on time
2.
PEOPLE’S CHOICES INVOLVE
COST
 Every
choice has a cost and benefit
 Ex: Sleep in = more rest, but potential
punishment OR No sleep = no
punishment
3.
LIFE IS LIVED ON A MARGIN
Each additional item added has a marginal cost
and a marginal gain – is one more worth it?
 Ex: The GUM CHALLENGE
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4.
PEOPLE RESPOND TO INCENTIVES IN
PREDICTABLE WAYS
Incentives always change people’s decisions
 Ex: Sales – If two products are available and one
is on sale while the other isn’t, people may
choose the cheaper one even if it’s a lesser
quality
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PEOPLE GAIN WHEN THEY TRADE
VOLUNTARILY
5.
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You can’t do everything – you trade
MARKETS COORDINATE TRADE
6.
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Markets bring people together perfectly
without intervention
PEOPLE’S CHOICES HAVE
CONSEQUENCES IN THE FUTURE
7.
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A choice today affects you and others later
Ex: Going to lunch may mean you don’t have
enough money for the concert this weekend.
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LIST THREE WAYS YOU USE
ECONOMICS IN YOUR DAILY
LIFE
DEFINE THE TWO FIELDS OF
ECONOMICS
WRITE ONE NEWSPAPER
HEADLINE WHICH ILLUSTRATES
POSITIVE ECONOMICS