Lawn boy an initiation to the beauties and mysteries of capitalism
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LAWN BOY : AN INITIATION TO THE BEAUTIES AND MYSTERIES OF CAPITALISM. OBJECTIVES. The student will understand the fundamentals of the market system. The student will understand the definition of Economics.

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LAWN BOY : AN INITIATION TO THE BEAUTIES AND MYSTERIES OF CAPITALISM

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Lawn boy an initiation to the beauties and mysteries of capitalism

LAWN BOY: AN INITIATION TO THE BEAUTIES AND MYSTERIES OF CAPITALISM


Objectives

OBJECTIVES

  • The student will understand the fundamentals of the market system.

  • The student will understand the definition of Economics.

  • The student will understand why people have to make choices and that with choosing comes consequences.

  • The student will understand that with every benefit there is always a cost.


Concepts

CONCEPTS

  • Economics

  • Scarcity

  • Market Economy

  • Opportunity Cost

  • Entrepreneurship

  • Incentives

  • Supply

  • Demand

  • Price

  • Benefits

  • Costs

  • Utility

  • Labor


National standards

NATIONAL STANDARDS

  • Standard 1 : ScarcityProductive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others.

  • Standard 2 : Marginal Cost/BenefitEffective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are "all or nothing" decisions.


National standards1

NATIONAL STANDARDS

  • Standard 3 : Allocation of Goods and ServicesDifferent methods can be used to allocate goods and services. People acting individually or collectively through government, must choose which methods to use to allocate different kinds of goods and services.

  • Standard 4 : Role of IncentivesPeople respond predictably to positive and negative incentives


Which one of these two things would you rather be doing right now

WHICH ONE OF THESE TWO THINGS WOULD YOU RATHER BE DOING RIGHT NOW?


Costs and benefits

COSTS AND BENEFITS

A Cost is something you give up in making a choice

A Benefit is something you gain.

What would be the costs and the benefits of doing this now?


Costs and benefits1

COSTS AND BENEFITS

Why have you chosen to do this instead? What are the costs and benefits?

WHY MUST YOU CHOOSE?

BECAUSE OF SCARCITY


Scarcity

SCARCITY

SCARCITY TELLS ME I

CAN’T DO BOTH, I

HAVE TO MAKE A CHOICE.

SINCE YOU CAN’T HAVE

EVERYTHING YOU WANT

ECONOMICS HELPS US

GET THE MOST OUT OF

WHAT WE CAN HAVE.


T i n s t a a f l

T.I.N.S.T.A.A.F.L.

Have you ever heard the phrase:

“There is no such thing as a free lunch”?


Opportunity cost

OPPORTUNITY COST

EVEN THOUGH

THE SIGN SAYS

SO, IS IT TRULY

FREE? I MAY NOT

GIVE UP MONEY,

BUT WHAT AM I

GIVING UP BY

ATTENDING?


If i eat lunch from 12 00 to 1 00 p m what can t i do

IF I EAT LUNCH FROM 12:00 TO 1:00 P.M., WHAT CAN’T I DO?


Opportunity cost is the best option given up when you make a choice

OPPORTUNITY COST IS THE BEST OPTION GIVEN UP WHEN YOU MAKE A CHOICE

What is the Opportunity Cost of the following choice?

  • Buying a gift for a friend.

  • Working at a job after school.

  • Waiting on line for an hour to buy a new cell phone.

  • Playing on your X-Box for two hours after dinner.

    Did you all have the same answers? Why not?


What is economics

WHAT IS ECONOMICS?

Economics is the study of how people make choices. When you make a good economic decision the benefits will be greater than the costs.


Utility satisfaction

UTILITY = SATISFACTION

He made a good decision

He made a bad decision


People respond to incentives

PEOPLE RESPOND TO INCENTIVES

INCENTIVES are things such as rewards that motivate a person to do something. Punishment is meant to be a disincentive.


Why do people make the decision to go into business for themselves what are the incentives

WHY DO PEOPLE MAKE THE DECISION TO GO INTO BUSINESS FOR THEMSELVES?WHAT ARE THE INCENTIVES?


Lawn boy an initiation to the beauties and mysteries of capitalism

TAKE OUT A PIECE OF PAPER AND DRAW A LINE VERTICALLY DOWN THE MIDDLE. LABEL ONE SIDE BENEFITS AND THE OTHER SIDE COSTS. WHAT WOULD BE THE BENEFITS OF OPENING YOUR OWN BUSINESS AND WHAT WOULD BE THE COSTS?

  • PROFIT

  • BE YOUR OWN BOSS

  • FREEDOM

  • FILL A NEED

  • HAVE MORE CONTROL OVER MY WORK SCHEDULE

  • PAID MORE FOR MY WORK

  • GREAT CHANCE OF FAILURE

  • NO ONE TO SHARE THE COSTS WITH

  • NO ONE TO SHARE RESPONSIBILITIES OR SKILLS

  • DO THE JOB OF THE WORKER AND THE BOSS

BENEFITS

COSTS


Incentives help people make choices

INCENTIVES HELP PEOPLE MAKE CHOICES

THERE WAS A TIME WHEN THE MAJORITY OF ADULT AMERICANS SMOKED AND PEOPLE THOUGHT IT LOOKED COOL.


Changing incentives change people s choices

CHANGING INCENTIVES CHANGE PEOPLE’S CHOICES

WE GOT EDUCATED

NOW LESS THAN 25% OF THE U.S. POPULATION SMOKES AND THE NUMBERS HAVE BEEN SHRINKING FOR DECADES. WHAT CHANGED?


So to recap

SO, TO RECAP!!!

  • SCARCITY TELLS US WE CAN’T HAVE EVERYTHING WE WANT

  • EVERY DAY OF OUR LIVES WE HAVE TO MAKE CHOICES

  • IN MAKING CHOICES WE WEIGH THE BENEFITS AGAINST THE COSTS

  • NOTHING IS FREE, THERE IS ALWAYS AN OPPORTUNITY COST

  • A GOOD ECONOMIC DECISION CREATES MORE BENEFITS THAN COSTS

  • INCENTIVES HELP US TO CHOOSE


What is a market

WHAT IS A MARKET?

  • FLEA MARKET

  • STOCK MARKET

  • FARMERS’ MARKET

  • GROCERY STORE

  • BOSTON MARKET

  • WAL-MART

  • HOUSING MARKET

  • JOB MARKET

When the word MARKET is said, what are some examples or images that come to mind?


What is a market1

WHAT IS A MARKET?

  • Buyers arrive with money looking to purchase things.

  • Sellers offer goods or services in exchange for money.

What are some characteristics that all of these examples have in common?


Common market characteristics

COMMON MARKET CHARACTERISTICS

  • Buyers won’t be satisfied if they value the money in their pockets more that the items for sale.

  • Sellers won’t be satisfied if they value the items for sale more than the buyers are willing to pay.

  • Both buyers and sellers have an incentive to reach a compromise price in order to be mutually satisfied.


The market economy

THE MARKET ECONOMY

THE WORLD’S ECONOMIES PROVIDE US WITH A LOT OF CHOICES AND THE WORLD’S SHOPPERS HAVE A LOT OF DIFFERENT INTERESTS.


The market economy1

THE MARKET ECONOMY

IN AMERICA, WE HAVE A LOT OF FREEDOM TO DECIDE WHAT WE WANT TO DO WITH OUR LIVES AND HOW WE WANT TO SPEND OUR MONEY


The market economy allows sellers to compete for consumer dollars

THE MARKET ECONOMY ALLOWS SELLERS TO COMPETE FOR CONSUMER DOLLARS

SUPPLY

DEMAND


Price of labor

PRICE OF LABOR

WHY DOES THIS GUY MAKE $30,000,000?

WHY DOES THIS GUY MAKE $7.25?


The answer is supply and demand

THE ANSWER IS: SUPPLY AND DEMAND

  • WE LOVE BASKETBALL, ESPECIALLY HIGH FLYING AND ACROBATIC DEFYERS OF GRAVITY ( HUGE DEMAND)

  • THERE’S ONLY ONE LeBRON (TINY SUPPLY)

  • WE LOVE FAST-FOOD THOUGH WE KNOW IT’S NOT GOOD FOR US (HUGE DEMAND)

  • THERE ARE SEEMINGLY ENDLESS CHOICES FOR IT AND THE PROCESS OF MAKING IT DOESN’T REQUIRE UNIQUE SKILLS. JUST ABOUT ANYONE CAN FILL THE JOB. ( EVEN BIGGER SUPPLY)


Do you know what this is

DO YOU KNOW WHAT THIS IS?

It’s the Motorola DynaTAC 8000X , the world’s first cell phone. It went on sale March 6, 1983 and the initial price was $3995. It had enough battery life for 30 minutes of talk and there was a waiting list of thousands anxious to buy it.


Lawn boy an initiation to the beauties and mysteries of capitalism

Today we have cellular technology that allows for all kinds of communication, video streaming, and downloads with more computing power and memory

then the technology that sent all of our astronauts to the Moon. Many are given away with service contracts.

HOW DID THAT HAPPEN?


The answer is supply and demand1

THE ANSWER IS: SUPPLY AND DEMAND

  • IN 1983, ONE COMPANY MADE CELL PHONES WITH VERY EXPENSIVE PARTS AND A GREAT AMOUNT OF COSTLY LABOR (TINY SUPPLY)

  • PEOPLE WERE CRAZY ABOUT IT AND WAITED FOR MONTHS BEFORE DELIVERY (BIG DEMAND)

  • IN 2011, MANY COMPANIES MAKE A VARIETY OF PHONES WITH VERY INEXPENSIVE PARTS AND VERY LITTLE HUMAN LABOR INVOLVED (HUGE SUPPLY)

  • MOST CONSUMERS HAVE A PHONE AND SPEND MOST OF THEIR MONEY ON SERVICES (DEMAND IS SLOWING DOWN)


Lawn boy an initiation to the beauties and mysteries of capitalism

READ EACH STATEMENT BELOW AND DECIDE WHETHER THE PRICE OF THE ITEM WILL GO UP OR DOWN. ALSO, IS THIS BECAUSE OF A CHANGE IN SUPPLY OR DEMAND?

  • A TICKET TO SEE YOUR FAVORITE FOOTBALL TEAM NOW THAT THEY’VE MADE THE PLAYOFFS

  • A GALLON OF GASOLINE AFTER A HURRICANE SHUTS DOWN OIL DRILLING PLATFORMS IN THE GULF OF MEXICO.

  • A BUSHEL OF CORN AFTER FARMERS IN IOWA DISCOVER A MORE POWERFUL FERTILIZER.

  • A PAIR OF DESIGNER JEANS AFTER EVERYONE’S FAVORITE CELEBRITY IS SEEN WEARING THEM THE NIGHT BEFORE ON AN AWARDS SHOW.

  • A BIG MAC AFTER RESEARCHERS DETERMINE THAT EATING TOO MUCH FAST FOOD CAUSES STUDENTS TO GET LOWER GRADES.


So to recap1

SO, TO RECAP!!!

  • MARKETS ARE CREATED TO ALLOW BUYERS AND SELLERS TO PROFIT.

  • SELLERS MAKE MONEY AND BUYERS GET THE ITEMS THEY’RE LOOKING FOR.

  • THE PRICE HELPS BUYERS MAKE DECISIONS ON WHAT THEY WILL PURCHASE AND HELPS SELLERS DETERMINE WHAT THEY SHOULD PRODUCE.

  • WAGES ARE DETERMINED BY THE SUPPLY AND DEMAND FOR THE JOB SKILLS OFFERED.

  • IN ORDER FOR THE MARKET TO WORK IT MUST BE OPEN TO EVERYONE


Is the market powerless to do anything about the price of gasoline

IS THE MARKET POWERLESS TO DO ANYTHING ABOUT THE PRICE OF GASOLINE?


Is anything in this world truly priceless

IS ANYTHING IN THIS WORLD TRULY PRICELESS?


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