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Explorations in Economics

Explorations in Economics. Alan B. Krueger & David A. Anderson. Chapter 1: Exploring Economics Module 2: Production Possibilities for Nation. Do Now. Get out your smiles and links materials. You will need 2 sheets of paper, tape, and scissors. And your workbook.

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Explorations in Economics

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  1. Explorations in Economics Alan B. Krueger & David A. Anderson

  2. Chapter 1: Exploring Economics • Module 2: Production Possibilities for Nation

  3. Do Now • Get out your smiles and links materials. • You will need 2 sheets of paper, tape, and scissors. • And your workbook.

  4. MODULE 2: Production Possibilities for a Nation KEY IDEA: A production possibilities frontier illustrates the tradeoffs society makes in its use of scarce resources. OBJECTIVES: • To explain why economists use models. • To present and interpret the production possibilities frontier model. • To explain the law of increasing opportunity cost. • To define the concepts of efficiency and growth.

  5. Economics Models Economists use modeling to simplifyreality. Models help to focus on selected aspects of the real world by stripping away nonessential details.

  6. Draw and Compare • Graph your results on page 5. • Then, on “go” compare your graph to everyone on your side of the aisle.

  7. Analyze Results • Draw a graph of your results. • Answer # 1-4.

  8. The Production Possibilities Frontier A production possibilities frontier, or PPF, is a curve that shows the maximum quantity of one good that can be produced for each possible quantity of another good produced.

  9. Opportunity Costs for Society

  10. Opportunity Costs for Society The law of increasing opportunity cost states that the opportunity cost of a good rises as more of the good is produced.

  11. Apply Results • With your desk partner: answer # 5-6.

  12. Do Now Complete Module 2 Review and Assessment

  13. Housekeeping Open notebook quiz on Tuesday covering: • Opportunity cost • Cost/benefit • PPFs • Resources Check Genesis to make sure you have submitted your expectations. Restroom breaks: ask, one at a time, not during instruction.

  14. Today • Go behind the PPF and understand the four basic resources used to produce goods and services…. • And why resources are scarce. • Relate resources back to economic growth.

  15. The Production Possibilities Frontier A production possibilities frontier, or PPF, is a curve that shows the maximum quantity of one good that can be produced for each possible quantity of another good produced.

  16. Efficiency and Growth An economy is efficient if there is no opportunity to make someone better off without making anyone else worse off.

  17. Resources Resources are the basic elements from which all goods and services are produced. Economists divide resources into four groups: • Land • Labor • Capital • Entrepreneurship

  18. Poster Project • Create poster to explain one resource. • Poster should include: • Visual of the resource • Definition (book – page 6) • Examples • Why scarce • Groups: • Land 4. Entrepreneurship • Labor 5. Technology & growth (page 19, 462) • Capital 6. Human Capital & growth (page 19, 461)

  19. Scarce Resources Resources are the basic elements from which all goods and services are produced. Land is anything drawn from nature for use in the production of goods or services. Laboris the time and effort people contribute to the production process.

  20. Scarce Resources Resources are the basic elements from which all goods and services are produced. Capital is anything long lasting that is created by humans for use in production. Entrepreneurship is the willingness of people to organize, operate, and assume the risks involved with business ventures.

  21. Scarce Resources Figure 1.1: Resource Scarcity With limited resources and unlimited wants, society is forced to make tradeoffs. DID YOU GET IT? How does the scarcity of resources affect society’s ability to satisfy its wants?

  22. Efficiency and Growth Economic growth is an increase in the ability to produce goods and services over time.

  23. How resources affect PPF • Workbook – problem set 1-6 on page 10-12 • Each pair takes one PPF. • Graph your solution on the whiteboard.

  24. Summary • Land, labor, capital, and entrepreneurship are scarce. • Which means we need to make choices about what to produce. • But technology and human capital enables use to use resources more effectively. • Creating the possibility of economic growth.

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