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Pump Primer. What do you think of when you hear the term “economics?”. (Carper, 1). “ECONOMICS for Christian Schools”. By Alan J. Carper Bob Jones University Press. 1998. Unit 1: What Is Economics?. Chapter 1 Part I Economics: The Science of Choice

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pump primer
Pump Primer
  • What do you think of when you hear the term “economics?”

(Carper, 1)

economics for christian schools
“ECONOMICS for Christian Schools”

By Alan J. Carper

Bob Jones University Press. 1998

unit 1 what is economics
Unit 1: What Is Economics?

Chapter 1 Part IEconomics: The Science of Choice

Production Possibility Frontier

and Graphs

chapter objectives
Chapter Objectives:
  • Define economics.
  • Explain why choices are necessary.
  • Explain how a Christian’s and an unbeliever’s perspective of economics differ.
  • Differentiate between economic goods and services, nuisance goods and free goods and services.
slide5
Contrast the concepts of intrinsic and subjective value.
  • Describe the opportunity benefits and opportunity costs of a purchase.
  • Differentiate between microeconomics and macroeconomics.
  • Differentiate between positive and normative economics.
biblical integration
Biblical Integration
  • In this world of limited resources we as Christians need to make wise and godly choices. Every decision we make should be pleasing unto God. We should constantly be thinking of our testimony before God and mankind. (Col. 1:9-12; Phil 1:27)
economics
Economics
  • It is the common sense “science that studies the choices that individuals, businesses, government, and entire societies make as they cope with scarcityand the incentives that influence and reconcile our choices.”

(Blade et al. 3)

slide8
The continuing inability of man to provide everything he wants and needs necessitates choices.
economic scope and purpose
Economic Scope and Purpose

Microeconomics Versus Macroeconomics:

“Economists study their subject on two levels:”

  • Microeconomics
  • Macroeconomics
slide10
Microeconomics

examines the individual components of the economy.

  • “What causes a person to save money?”
  • “How does one business firm set its prices?”
  • “How will the closing of a factory affect the individual community?”

(Bade 3)

slide11
Macroeconomics

examines the economy as a whole (aggregates).

  • Concerned with large-scale economic choices and issues.
  • Study of national and global economies.

(Carper, 8)

slide12
Macroeconomics
  • “What causes bank interest rates to rise and fall?”
  • “What causes large-scale national unemployment?”
  • “Why do the Japanese sell more goods to the United States than the United States sells to Japan?”

(Carper, 8)

slide13
There are two big economic questions:
    • “How choices determine what, how, and for whom goods and services get produced?
    • When do choices made in self-interest also promote social interest?”

(Blade et al. 3)

three basic questions
Three Basic Questions
  • What?
  • What goods and services get produced and in what quantities?

(Blade et al. 4)

three basic questions15
Three Basic Questions
  • How?
  • How are goods and services produced?

(Blade et al. 4)

three basic questions16
Three Basic Questions
  • For Whom?
  • For Whom are the various goods and services produced?

(Blade et al. 4)

slide17
.

Goods (objects) and services (actions) are those which people value and produce to satisfy human wants

a good any tangible physical thing that has a measurable life span
A good - any tangible (physical) thing that has a measurable life span.

newspaper

VCR/CD Players

food

(Carper, 4)

a service is any intangible item labor
A service is any intangible item = labor.

customer service

accountant

librarian

(Carper, 4)

slide20
“Goods and services that bear a positive economic cost are known as economic goods and economic services.“

(Carper, 4)

slide21
“Goods and services that you are paid to take are said to be negative economic cost and are called nuisance goods and services.”
  • Such as, toxic waste, garbage, and sewage.
slide22
Economists argue that noise pollution and visual distractions, such as, unsightly billboards constitute nuisance services.
slide23
“Some firms make significant profits by taking nuisance goods and turn them into economic goods – a process called recycling.”

(Carper, 5)

when do choices made in self interest also promote social interest
When do choices made in self-interest also promote social interest?
  • The choices that are best for the individual who makes them are choices made in the pursuit of self-interest.
  • The choices that are best for society as a whole are choices made in the social interest.
why do we make choices
Why Do We Make Choices?
  • We make choices numerous times each day:
  • “Should I get out of bed or sleep just a few more minutes? “
  • “Do I want oatmeal or pizza for breakfast?”
  • Shall I drink milk, orange juice, or Dr. Pepper?

(Carper, 2)

why are choices necessary
Why are choices necessary?
  • The quality of a person’s life is directly related to the quality of each choice he/she has made in their life.
  • To understand choice is to understand life and to understand economics is to understand choice.
as christians we are to be careful and wise in our choices
As Christians we are to be careful and wise in our choices.
  • “There is a way that seems right to a man, but its end is the way of death.” Prov. 14:12
  • “All the ways of a man are pure in his own eyes, but the Lord weighs the spirits.”Prov. 16:2

(“The New King James”)

slide28
While man can be self-deceived in his choices – God determines the true motives (Prov. 21:2; 24:12; I Sam 16:7; I Cor. 4:4).
  • Even when we make the wrong

choices God will use those choices for His purposes

(Gen. 50:0; I King 12:15; Ps. 119:133;

Jer. 10:23; Dan. 5:23-30; I Cor. 3:19, 20)

core economic ideas
Core Economic Ideas
  • Rational Choice
  • Opportunity Cost
  • Benefit
  • Margin
  • Incentives

(Bade 13)

rational choice
Rational Choice

A rational choice is a choice that uses the available resources to best achieve the objective of the person making the choice.

We make rational choices by comparing costs and benefits.

(Bade 13)

cost what you must give up
Cost: What You Must Give Up

Opportunity Cost Is the basis of choice

  • The best thing that you must give up to get something—the highest-valued alternative is forgone.
  • “Opportunity benefit of a choice is the satisfaction a person receives from the choice.”
  • “Opportunity cost is the satisfaction one gives up by not choosing what was second best.”

(Bade 14)

slide32
On the Margin
  • A choice made on the margin is a choice made by comparing all the relevant alternatives.

Making a Rational Choice

  • When we take those actions for which marginal benefit exceeds or equals marginal cost.

(Bade 15)

marginal cost vs marginal benefit
Marginal Cost vs. Marginal Benefit

Marginal cost is the cost of a one-unit increase in an activity.

Marginal benefit is what you gain when you get one more unit of something.

(Bade 15)

incentives
Incentives
  • “A reward or a penalty...that encourages or discourages an action.”
  • There are marginal costs and marginal benefits to incentives.
    • Professional Sports
    • Actor/Actress

(Bade 13)

to choose or not to choose that is the question activity 1

To Choose or Not to Choose? That Is the QuestionActivity 1

NCEE

Capstone: Exemplary Lessons for High School Economics

New York, NY.

objectives
Objectives
  • Identify alternatives in various choice situations
  • Identify costs and benefits associated with various alternatives
  • Make economizing choices, given competing alternatives.
introduction
Introduction
  • Productive 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.
  • Effective decisions 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.
activity 1
Activity 1
  • The purpose of this lesson is to help you develop the ability to solve economic problems.
  • To do this, you need to learn some basic assumptions of economics.
  • One assumption has to do with whether or not people have choices.
activity 139
Activity 1
  • People often think they have no choice.
  • Example:
    • Todd recently purchased his own car on credit. He works at a part-time job at an auto-wrecking firm to earn the money he needs to make payments on his new car. Lately, his work in school has declined. When his teacher asked him if he was studying for the tests, he replied, “Not really, I’d like to study more, but I have no choice. I’ve got to keep working to pay off my car loan.”
activity 140
Activity 1
  • Did Todd have alternatives in his situation?
  • Have you ever felt like Todd, that there really wasn’t a choice?
  • Read the case in your Activity handout.
activity 141
Activity 1
  • What was Ashley’s problem?
  • What alternatives did Ashley have?
  • What were the costs of each alternative?
  • What were the benefits?
activity 1 lesson
Activity 1 Lesson
  • Break-up into groups of no more than four students.
  • Read the two cases and answer the questions together.
  • You will need one individual from your group to be your spokesperson.
example 1
Example 1

Alternatives:

Possible Cost:

Possible Benefit:

Reduce profits, maybe lose money and go out of business.

Keep prices the same and customers happy.

Keep the price the same.

Keep the price the same by discontinuing some of the sandwiches’ special features.

Customers might not buy as many sandwiches – reduced sales.

Keep prices and profits about the same.

Discontinue selling sandwiches and introduce less expensive lunches.

Customers might not like the new product, maybe lose sales.

Keep profits about the same.

Raise prices of sandwiches

Customers might buy less, maybe lose money.

Keep profits about the same.

example 2
Example 2

Alternatives:

Possible Cost:

Possible Benefit:

Difficult to transform the plant and equipment.

Keep profits about the same.

Produce a different product.

Produce airbags and GPS or a foreign producer.

Difficult to get a contract.

Increase sales

Close the plant and go bankrupt

Lose money.

Employees out of work.

No more worries about competing with foreign producers.

Increased sales and jobs for his workers.

Few obvious costs to this owner and workers but increased costs for others

Restrict imports

works cited
Works Cited

Blade, Robin, and Michael Parkin. Foundations of Economics: Instructor’s Manual. 2nd ed. Boston: Pearson Education, Inc., 2004.

Carper, Alan. Economics for Christian Schools. Greenville: Bob Jones University Press, 1998.

"The New King James Version." Logos Bible Software. CD_ROM. ed.2004.

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