Period 1 (Aug. 14), Period 2 (Aug 14), Period 4 (Aug 15)

Agenda Review Class Rules Review Key Terms Homework Article Worksheet Student Video Lecture – Production Possibilities Curve Production Possibilities Worksheet Introduction to Chapter 2 HOMEWORK

Read Chapter 2, Q. 1 – 6Review Powerpoint for next class (online)Read “Current Reading Assignment” (online)

Cycle 1, Day 1

Class RulesBe on timePay attentionBe preparedDon’t use cellphones

• Comments• You are responsible to monitor your grade

• You are responsible to seek help (e-mail is best way to contact me)

Absences

You are responsible for…• Getting the material

• Reviewing the Class Presentations (posted on my faculty webpage)

• Getting the homework assignment, reading assignment, etc.

Absences (continued)

Tests…

You need will make-up the test at detention when you return.

You will receive a ZERO if you have not made arrangements and I return the test.

E-mail is the best way to make arrangements to take the test.

Additional Class Materials

Multi-Colored pens (or pen)One inch three ring binder

Laptops, kindles, iPads, etc.

Yes, you can use them.

Economics is….The study of human behavior. How people

allocate limited resources to produce goods and services to satisfy unlimited needs and wants.

Remember…resources are always scarce, always limited

Key Terms…

Four Factors of Production (resources)1. Land

All Natural resourcesExample - Oil, Coal, Trees

2. Labor People producing a good or service

Example – Auto worker, Lawyer, Teacher

3. Human Capital• Training for Labor

Example – College Education, Seminars

4. Physical Capital Tools used by labor to make goods and services

Example – Computers, Buildings, Factories, desks

Key termsScarcity vs. shortageNeed vs. wantGood vs. ServiceTrade-off vs. Opportunity CostEntrepreneur

Scarcity vs. shortage

Scarcity is permanent

Shortage is temporary

Temporary may be days, weeks months or even years

Need vs. Want

Need = gotta have itWant = nice to have it

For each person to decideCellphone example

Good vs. Service

Good• Tangible• Generally produced with physical skills• Examples….a car, a desk, an airplane

Service• Intangible• Generally produced with knowledge• Examples…Medical services, legal services, education

Trade-off vs. Opportunity CostTrade-off = All the choices given up

Opportunity Cost = Most valuable choice (trade-off) given up

Example….your time

EntrepreneurUses resources (factors of production) to

produce goods and services to satisfy needs and wants



Page 5 of your text book

Entrepreneur

Uses resources (factors of production) to produce goods and services to satisfy needs and wants



ExamplesLa Salle HSJack FMBank ATMAmazon.com

Quick Review…

1. What is the difference between a shortage and scarcity?(a) A shortage can be temporary or long-term, but scarcity always exists.(b) A shortage results from rising prices; a scarcity results from falling prices.(c) A shortage is a lack of all goods and services; a scarcity concerns a single item.(d) There is no real difference between a shortage and a scarcity.

2. Which of the following is an example of using physical capital to save time and money?(a) hiring more workers to do a job(b) building extra space in a factory to simplify production(c) switching from oil to coal to make production cheaper(d) lowering workers’ wages to increase profits

Homework• Questions 1 – 7

• PDF page 37

ArticleSearch Economic Terms

WorksheetChapter 1, Section 1

Student videos

http://www.youtube.com/watch?v=fdM8ssBvNxU

THREE MINUTE BREAK

http://www.online-stopwatch.com/full-screen-stopwatch/

Production Possibilities CurveGraph showing the trade-offs (i.e. possible

production outcomes)

Production Possibilities CurveGraph showing the trade-offs (i.e. possible production outcomes).

Trade offs is a key concept. More of one good or service, less of the other.

Product (good or service) B

Product (good or service) A

Production Possibilities CurveWhy is the production possibilities curve

“bowed out”?


“bowed out”?

ANSWER: The Law of Increasing Opportunity Costs


“bowed out”?


As you produce more of one product (Good or Service A), the cost (opportunity cost) increases.


“bowed out”?


As you produce more of one product (Good or Service A), the cost (opportunity cost) increases.

WHY you might askBook Example

Watermelons (millions of tons)

Shoes(millions of pairs)

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Production Possibilities Graph


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c (14,12)

d (18,9)

A production possibilities graph shows the cost of producing more of one item. To produce four million more shoes (move from point c to point d) is a cost of 3 million pairs of shoes. The Trade Off (the real cost) of producing four million more shoes (to go from 14 to 18) is the three million tons of watermelons that you give up (going from 12 to 9)



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c (14,12)

d (18,9)

What is the cost to produce the fifteenth million pair of shoes (one million pairs of shoes that happens to be the fifteenth million)?



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c (14,12)

d (18,9)

What is the cost to produce the fifteenth million pair of shoes (one million pairs of shoes that happens to be the fifteenth million)?

ANSWER: Eight million tons of watermelons



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c (14,12)

d (18,9)

What is the cost to produce the first million pair of shoes?



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c (14,12)

d (18,9)

What is the cost to produce the first million pair of shoes?

ANSWER: 200,000 tons (1/5 of a million) of watermelons

Law of Increasing Costs…Revisited

The Law of Increasing Opportunity Costs - As you produce more of one product (Good or Service A), the cost (opportunity cost) increases.

The cost of first million shoes cost 200,000 tons of watermelons

The cost of the fifteenth million (still one million shoes) cost five million tons.

THE COST INCREASED

Law of Increasing Costs…Continued

Why is that the case?

Law of Increasing Costs…Continued

Why is that the case?

Because the entrepreneur uses the best shoe making resources (factors of production) for making shoes first…the worst is used last.

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g (5,8)

A point of underutilization

c (14,12)

d (18,9)

e (20,5)

f (21,0)

a (0,15)b (8,14)

S

Efficiency means using resources in such a way as to maximize the production of goods and services. An economy producing output levels on the production possibilities frontier is operating efficiently.

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T

Future productionPossibilities frontier

c (14,12)

d (18,9)

e (20,5)

f (21,0)

a (0,15)b (8,14)

S

Growth If more resources become available, or if technology improves, an economy can increase (more stuff) its level of output and grow. When this happens, the entire production possibilities curve “shifts to the right.”

Guns or ButterPhrase used by economists to describe trade-offs.

Military Goods (guns)

Consumer Goods

(Butter)

Worksheet, Production Possibilities Curve

HomeworkRead Chapter Two, Questions 1 – 6 (page 47)Review Powerpoint for next class (online)Read “Current Reading Assignment” (online)Reading Assignment for next class

The subject of the article is the importance of human capital

Questions to consider (i.e. be able to answer)

• Why is Taiwan doing well?• What factor of production is key to Taiwan’s success?• Which factor of production was important....

When Columbus sailed to the new world? During the period of colonization? During the industrial revolution?

• How does this effect you in 2013?

HANDOUTS

Period 1 (Aug. 14), Period 2 (Aug 14), Period 4 (Aug 15)

Education

Transcript of Period 1 (Aug. 14), Period 2 (Aug 14), Period 4 (Aug 15)