Coach Saucedo AP Macroeconomics Economics Classroom Rules

Coach Saucedo AP Macroeconomics Economics

Classroom Rules l l l BE ON TIME. NO CELLPHONES. Put them in the “bucket” if I ask you to. NO SLEEPING. Stand-up in the back, or go see your A. P. BE PREPARED – Homework, pencil, notebook. DO NOT TALK WHILE I AM TALKING!!! I DISLIKE REPEATING MYSELF! ASSIGNED SEATING. NO COMPROMISE. NO FOOD OR DRINKS – UNLESS I GIVE THEM TO YOU. NO MORE THAN 5 MINUTES WITH A RESTROOM PASS. IF YOU TAKE MORE THAN 5 MINUTES YOU WILL NOT GET ANOTHER PASS FOR THE 6 WEEKS. IF YOU ACT LIKE SENIORS I WILL TREAT YOU LIKE SENIORS – WITH THE UTMOST RESPECT YOU DESERVE. I ARRIVE AT SCHOOL AT 8: AM AND LEAVE AT 3: 30 PM. COME AND SEE ME ANYTIME. YOU WILL BE EXPECTED TO WORK THE ENTIRE CLASS PERIOD.

“Intelligent people want to learn, but foolish people are satisfied with ignorance” Proverbs 15: 14 “I have good plans for you, not plans to hurt you. I will give you hope and a good future” Jeremiah 29: 11 Before you speak, ask yourself, is it kind, is it necessary, is it true, does it improve on the silence? Sai Baba

What Does Time Mean To You? 6, 570 Days If you are 18 yrs old, the number of days you have been alive. 28, 470 days If you live to 78 yrs old the number of days you will have lived IT IS UP TO YOU AS TO HOW PRODUCTIVE THIS TIME WILL BE

I want to talk to you about Three four-letter words:

Tell me what you There are NO other substitutes

What are we trying to satisfy?

I want to talk about the last four-letter word

Tell me what is TINSTAAFL It doesn’t cost anyone, anything! “There Is No Such Thing As A Free Lunch”

What is Economics? Economics is the social science that studies how societies (individuals, businesses, and Government) allocate their scarce resources to satisfy unlimited wants. Three IMPORTANT words – Allocate – to assign, allot, distribute – Scarce – insufficient to meet demand, not enough to go around for all – Resources – “things” available to a society that are used to attempt to satisfy unlimited wants.

ECONOMICS Scarcity Choices What is given up Choices “No horn of plenty” Unlimited Needs and Wants Limited Resources Demand Supply

ECONOMICS - “science of scarcity” -the study of the choices people make in an effort to satisfy their unlimited needs and wants from limited resources

The principal problem of Economics is… Scarcity

“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics”. --Thomas Sowell

Resources or “Factors of Production” Land – Natural Resources Acreage, rivers, lakes, ports, natural resource (oil, precious metals, minerals) Labor – Human Resources Physical and Mental talents that produce goods and services Capital – “stuff you use to make other stuff” All manufactured goods and services used in producing consumer goods. Examples: Tools, machinery, equipment, trucks to carry goods, airplanes, etc. Entrepreneurship – 1. 2. Someone who takes the initiative in using or combining the above Resources to produce a good or service. Someone who is innovative, a risk taker, and makes basic business decisions. Remember -- ALL THESE RESOURCES ARE IN LIMITED SUPPLY THEY ARE SCARCE!!!!

The Four Factors of Production Resources beget production, which beget income, which beget wealth. 1. Land [natural resources] – Nature’s items [“gifts of nature”] resources nature A. In the earth - coal, oil, water, fossil fuels, etc. B. On the earth – vegetation and water C. In the atmosphere – sun, wind, and rain [Land is the starting point of all production. “Stuff” from which everything is made. . Water Wind Sun Fossil fuels “Gifts of Nature”

2. Labor [human resources] {“effort”} resources “effort” anyone who works [“paid work”] work” [Labor is the “brain-power” and “muscle-power” of human beings] A. Physical – pro athletes & lumberjacks B. Intellectual – ministers, doctors & lawyers *Most important resource – 70% of input cost. “Hired Help”

Real Capital v. Financial Capital REAL CAPITAL [tools, machinery, & factories] Can produce something directly with these . FINANCIAL CAPITAL [stocks, bonds, and money] Can’t produce anything directly with these

. 3. Capital Resources – all “man-made inputs” used in the production process (tools, machinery, and physical plants) A. Capital goods – goods [machinery, buildings, & tools] used to produce other goods. [crane, Ford plant, hammer] goods [products meant for “future consumption”] consumption” B. Consumer goods – products meant for “immediate consumption” “Real Capital” [machinery, physical plants & tools] [capital is a factor of production] v. “Financial Capital” [stocks, bonds, & $] [not factors of production] A product can be both a consumer good & a capital good –depends on its use. Ex: Jet aircraft used by a movie star to visit friends (consumer good). The same aircraft used by a business manager to serve customers [capital good]. Ex: F 150 pick-up to deliver produce [capital good] or take family to church [consumer good] “man-made inputs”

Rent Land Wages Labor Interest Capital Profits Entrepreneur . 4. Entrepreneurship – starting a new business or introducing a new product. “Sparkplugs” who introduce the product or start the new product business. He combines land, labor, & capital to produce products Resource payments. The resource owners receive rent [for the use of their land; wages [for their labor]; interest [payment for financial capital], and profits [for their entrepreneurial ability].

The Three Fundamental Questions. . . 1. What will be produced with our scarce resources?

The Three Basic Questions. . . 1. What will be produced? 2. How will the goods be produced?

The Three Fundamental Questions. . . 1. What will be produced? 2. How will the goods be produced? 3. Who will get the goods and services?

The Case for the Market System Efficiency, Incentives, and Freedom Adam Smith said the “invisible hand” determines what gets produced, how, & for whom. It is the invisible hand that moves us along the PPC. The invisible hand is now called the market mechanism. Its essential feature is mechanism the price signal

Scarcity Choices Unlimited Wants WHAT G/S HOW will the to produce? Limited Resources WHO will receive the G/S produced? G/S be produced? Most needy or most money BASIC ECONOMIC PROBLEMS Answers to the above determine: ECONOMIC SYSTEMS [Eskimo/pygmy] TRADITIONAL COMMAND FREE MARKET

Economic Systems – the way society produces products 1. Traditional 2. Pure Command 3. Pure Market 4. Mixed a. Capitalism b. Democratic Socialism c. Authoritarian Socialism [Communism] The way the 3 basic questions are answered Determines an economic system. 1. Traditional-[where “CUSTOM RULES”] A. What, how, and for whom are answered by tradition B. Change is resisted, no technology [clashes with tradition] C. Heredity and caste system limit the economic role of individuals. D. 35, 000 Pygmies in the Ituri Forest are an example. E. Men hunt & women/children gather/prepare food. F. Wear loincloths from bark of fig trees [“PYGLER” or “PYBUGLE Boy”] G. Eat mushrooms, berries, roasted grasshoppers, monkeys, & plantain H. Eat bone marrow & everything else in an elephant. I. Used to be “PYGACHE”, big Pygmies, have to wear “LARDACHE. ”

2. PURE COMMAND - where the “GOVERNMENT RULES”. The government controls all resources. What, How, and For Whom answered by the government. Karl Marx 3. PURE MARKET – where “INDIVIDUALS RULE”. Individuals and firms control all resources. The government has no say. WHAT, HOW & FOR WHOM are decided by individuals. Adam Smith MIXED – all countries have mixed economic systems How are these words used in everyday life? 1. Traditional 2. Command 3. Market

• A mixed economy is one that uses both market signals and government directives to allocate goods & resources. • Most economies use a combination of market signals and government directives to select economic outcomes.

When faced with SCARCITY of resources, decisions have to be made about how to use those resources Trade-offs Opportunity Costs

Trade-Offs • This is the decision making process that is occurring in your mind right now! • Am I going to pay attention to what Coach Saucedo is saying, or am I going to daydream? • Am I going to come to class or go buy a lottery ticket? • Am I going to stay in school or go find a full time job? • Each and every decision you make has a cost!! Not necessarily a cost in dollar terms, but a cost in that you must give up something in order to get more of something else.

Trade-offs–decision (choice) to get more of choice one thing means to accept less of another. Opportunity Cost – 2 nd Choice (most important concept in economics) [what you sacrifice when you make a choice] “I’m in love with both, but can have only one. ” Sadie Jen The Bachelor Lorenzo Borghese

Opportunity Cost • The “price you pay” for each decision you make is called the OPPORTUNITY COST. • Opportunity cost is vital to the understanding of economics. • “The amount of a product or service that must be forgone (given up) in order to obtain more of the next best alternative product or service”

Opportunity Cost Opportunity Benefit Opportunity Set [“what is possible for $10, 000”] Scarcity Choices Opportunity Costs

And – As 40 Million Watched, Joe Millionaire chose Zora over Sarah And Why Didn’t Joe Pick Sarah? This Is The Reason He Gave Her.

Opportunity Cost of Doing Your Best In School Better Job Better chance in college Better chance at the best colleges Cheerleaders doing flips Better chance to get your attention to be the boss Beautiful Spouse Learn Responsibility ask you! Fewer home problems Better Self-esteem You always do your homework Always get a prom date or 2 And – They Report Card A Econ A English A Calculus A Journalism C Sex Ed

Beautiful Spouse & Great Kids [comes from a good education] education And what kind of kids does the educated worker end up with?

What Kind Of A Sports Car Do You Drive [because of a good education]

Opportunity Cost [of NOT doing your best] [Poor self-esteem] He will have a difficult path More problems at home “No, I will not go to the prom with you. You are a loser. ” You don’t do your best

Opportunity Cost [of NOT doing your best in school] Worse Job “Paper or Plastic? ” “Do You want fries with that? ”

And Your Spouse [due to a bad education] Men have these 4 choices Women also have 4 choices.

And Your Kids “Sorry” – because of a bad education