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You plan to open a restaurant that specializes in meals cooked with organic products. You realize that location is very important for this kind of business. You have 2 options: either rent an expensive site downtown or you can buy an inexpensive building in a quiet neighborhood. What are the benefits and the opportunity cost for each option? Please give a detailed answer.
Economics Money Vs Currency How far does the rabbit hole go? ? ?
Using Scarce Resources Suppose you are moving into your 1 st apartment. You have saved $1200 to use for your purpose. When you go shopping , you learn that these things are the prices for things that you have on your list to buy. Kitchen chairs-$200 TV-$150 Bed-$350 Dishes-$45 Computer-$400 Silverware-$25 Stereo-$300 Towels-$35 Couch-$300 Desk & Chair-$175 b
Economics b Economics ($) is what keeps a nation on its feet. It determines whether or not a nation’s people are educated, well-paid, fed, healthy, and living a good life.
Decisions. . Decisions…. b Suppose you have $20 to cover the cost of lunches for the week. How would you use the money to cover your wants Monday through Friday? How would buying a late afternoon snack for $1 on two of the days affect your lunch choices?
The Economic Way of Thinking Scarcity is the situation that exists because wants are unlimited and resources are limited. Scarcity Leads to Three Economic Questions: 1. What and How much to produce 2. How will it be produced? • societies w/ unskilled (farming) • Skilled people use capital methods 3. How much should people get? Same , less or more. • How will it be delivered?
Your turn 1. List 5 wants and tell why scarcity affects your wants. 2. How does scarcity affect consumers? Producers? Governments? 3. List 3 economic questions about the role of scarcity?
The Factors of Production Economic resources needed to produce goods and services Ø land= Natural resources Ø Labor= human time, effort…. Ø Capital= machines or people that produce& distribute goods & services Ø Entrepreneurship= putting it all togeather to sell to consumer
Your turn 1. 2. 3. Is entrepreneurship a gift or can it be developed. How? How do you think the F. O. P were used to create a product you recently brought? Activity on pg# 11, using scarce resources
Economic Choice Today: Opportunity Cost • Economic choices shaped by Incentives — benefits that encourage people to act in certain ways Utility — benefit or satisfaction gained from using a good or service To make choices, people economize: make decisions according to best combination of costs and benefits
Cost and Benefits • People motivated by incentives, expected utility, desire to economize • They weigh costs against benefits to make purposeful choices NO FREE LUNCH: • All choices have a cost= time, money, etc… • Trade-off — usually means giving up some, not all, of a thing to get more of another. Example… working after H. S vs going to college Opportunity cost– what will this opportunity cost me?
Uh-oh…. Trade-off — usually means giving up some, not all, of a thing to get more of another. Example… working after H. S vs going to college Opportunity cost– what will this opportunity cost me?
Analyzing Choices Cost-benefit analysis — examination of costs, expected benefits of choices How Much more time, effort or money are you willing to give up? Marginal cost The rewards or benefits from this is Marginal benefits Hard work pays off!!
Your Turn 1. 2. A website reviewing new CDs offers you a Free subscription. All you have to do is complete a brief online application. What is the opportunity cost of this “free offer”? Why do you think it’s being made? You are on a limited budget and planning a 4 day vacation. Rental car cost $295 the ride takes 10 hr. Plane fare is $150 each way and the ride takes 1 hr & 30 min. Conduct a cost benefit analysis to help you
Economic models • simplified representations of economic forces • Production possibilities curve (PPC) is one model that shows maximum goods or services that can be produced from limited resources — also called production possibilities frontier • Everything is running @ full production • No New Technology can • improve production
Complete chart on pg 17
PPC Curve • • Points B & A Efficiency Resources are used to the max Points D – underutilization? Law of increasing opportunity cost — as production switches from one product to another, more resources needed to increase production of second product U. S accquried new land in 1700’s thus creating new employment, technology
Example: Increasing Opportunity Costs • Increase in opportunity cost — each new unit costs more than last one • Reasons for increasing cost of making more of one product — need new resources, machines, factories — must retrain workers • Costs paid by making less and less of other product
Microeconomics and Macroeconomics Microeconomics – small things specific, individual elements in an economy — prices, costs, profits, competition, consumer and producer behavior Microeconomics— combination of all individual units (big picture) — Includes consumer, business, public or government sectors Example: inflation
Which category does each item belong. Microeconomics or Macroeconomics. Why? b Study statistics to see how well the economy is doing at creating jobs or increasing exports. b Studying statistics on gasoline sales and hotel bookings to explore the impact of higher gas prices on vacation plans
Your Turn Which does each of the news headings relate to. Micro or Macroeconomics? Ø National Unemployment figures rise Ø World Trade Organization Meets Ø Shipbuilder Wins Navy Contract Ø Cab Drivers on strike Ø Gas prices jump 23 cents
Positive Economics and Normative Economics b Positive economics — describes and explains economic behavior as it is. Uses scientific method-observe data, hypothesize, test. proved or disaproved Example. . “I have no money, therefore, I am broke” Normative economics studies what economic behavior should be studies facts, asks if course of action is good Example. . “I’ll get a job, therefore, I’ll have money”
Adam Smith: Founder of Modern Economics Seeing the Invisible • An Inquiry into the Nature and Causes of the Wealth of Nations, 1776 — challenged mercantilism; argued for free trade • Invisible hand guides free marketplace, benefits sellers and buyers — people pursue own economic self-interest — producers sell at prices that satisfy them and that consumers will pay
What is money? b True wealth is your time and freedom b Money is a tool for trading your time b World has been tricked into using currency instead of real money.
b The Greatest financial crisis EVER!! » Massive wealth transfer in history b Monetary system is a hoax!!!
Home. Work b b b The Real Cost of Expanding the O’Hare Airport Case Study Pg 32 -33 Answers only
Analyze Graphs pg 19 -22 ans only
Your Project b b b Create a new product or service that can be used today. Identify the Factors of production need to manufacture this product or provide the service. Create a visual showing how the Factors of Production would be used.
Chp 1 quiz 1. What term below BEST identifies a person who makes goods or provides services? b A. consumer b B. customer b C. provider b D. producer
2. Which response BEST explains what area of people with a large unskilled labor force will most likely practice? b A. machine-intensive farming methods b B. labor-intensive farming methods b C. machine and labor-intensive farming methods b D. few intensive farming methods
3. From the choices below, which response is an example of a trade-off? b A. giving up going to a movie to spend time shopping b B. giving up going to a movie because it got bad reviews b C. going to a movie to see your favorite movie star b D. going to a movie because it good reviews
4. According to the textbook, a microeconomist would study which trend? b A. a general decline in prices b B. a rise in tea prices. b C. the ups and downs of business cycles b D. the impact of national tax policies
5. What is true wealth? a. Time & Money b. Time & Freedom c. Time & Gold d. Time & Education
6. Briefly explain how is wealth transfered?
7. ______ is owned by private corporation/bankers? a. Federal Reserve Bank b. Federal Bank of America c. Federal American bank d. Federal reserve corporation
8. Briefly explain the term Fungible as it relates to currency?
9. Briefly explain the difference between money & currency?
10. Explain why the narrator claims that gold and silver are the optimum form of money?
11. Governments create this form of currency Which also has a 100% failure ratio. a. Flat b. Fiat c. Worthless paper d. Tissue paper
12. Since the creation of the Federal Reserve in 1913 the Dollar has ? a. Maintained it’s value at 100% b. Lost its value by 95% c. Lost its value for a while but eventually gained value by 95% d. Gained value by 95%
13. Which of these aren’t like the others, also explain why
14. According to the video, Explain why governments don’t like to acknowledge gold as an asset?
15. Currency creation is also known as______