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Economics Lecture: Factors of Production, Scarcity, and Decision Making

Join us for a lecture on the fundamental concepts of economics, including the factors of production, scarcity, and decision making. Learn about the trade-offs and opportunity costs involved in economic decision making. Don't miss out!

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Economics Lecture: Factors of Production, Scarcity, and Decision Making

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  1. Agenda: 3/20/18 Turn in yesterday’s preview assignment if didn’t do so yesterday by 9:25am Current Event sign-ups Econ Notebook set-up Unit 1 – Lecture #1 Factors of Production WS

  2. Economics - Unit 1 Lecture #1 - What is Economics? Lecture #2 - Economic Systems & Decision Making Lecture #3 - Business Organizations

  3. Chapter 1 Lecture:Fundamental Economic Problem: • Societies do not have enough resources to satisfy everyone’s WANTS & NEEDS • This concept is known as SCARCITY

  4. Did you know… (don’t write) • We witness scarcity with each year’s “hot” new toy. Cabbage Patch dolls were big during the 1980s, as were Tickle Me Elmos in 1996. The Wii when it first came out. People stood in long lines and paid ridiculously high prices to get these popular toys. • McDonalds’ Szechuan • N Sauce?

  5. Scarcity • A lack of resources vs. unlimited wants and/or desires

  6. NEEDS: Food Water Shelter Clothing (“designer” brands are not NEEDS ; ) WANTS: TV Cell Phone Car Vacation Clothes (designer) * Anything not required for “survival” Need vs. Want

  7. The BIG 3(The three basic Economics questions that must be asked) • WHAT to produce? (w/ the given resources) • HOW to produce? (w/ currently available production methods) • FOR WHOM to produce? (Who is the commodity for? Can everyone afford it? Is it available to all?)

  8. The Factors of Production • There are 4 factors of production that must be present to produce goods & services • ( “goods” – tangible / touchable product) • ( “service” – intangible / not touchable service that is performed)

  9. Production is creating goods and services--the result of land, labor capital, and entrepreneurship! Resources

  10. 1) LAND • i.e. Natural Resources • Water • Air • Minerals • Livestock • Climate • “gifts of nature” Is this Factor limited or unlimited? Why?

  11. 2. Labor • People w/ all of their: • Efforts • Abilities • Skills / Intellectual “capital” What are YOU bringing to the table???

  12. 3. Capital (a.k.a. Capital Goods) • Tools, equipment, machinery used to produce goods & services (G & S) • Paperclip to and Aircraft Carrier • (read) The size of the C.G. doesn’t matter, only that it is some type of equipment used by the LABOR to produce a Good or Service

  13. 4. Entrepreneurs Started in a garage • The people & innovators willing to “risk it all” to start a business, enter the market, and try to generate profits. • Without Entrepreneurs, there would never be new business or products brought to the markets • Who are the Entrepreneurs of your generation? – BIO

  14. Assignment • Complete the “Factors of Production” packet • Left-side notebook assignment

  15. Agenda: 3/21/18: • Spend 5 minutes finishing / going over last nights HW • Warm-up: Decision Making Charts • Finish Ch. 1 Lecture • HW: Dance Activity WS

  16. Decision-Making table (left-side warm-up) Benefits foregone: ____________________________________________ Reflection: ___________________________________________________

  17. Warm-up (left-side) – Decision Making Chart(Opportunity Cost – the next best alternative that you “give up”) Make a Decision Making Chart (example on previous slide) Fill in the “boxes” while thinking about the following prompts ** What time did you get up this morning? (column 1) What were the benefits of that decision? ** Could you have made a different decision about when to get up this morning? (column 2) What would have been the benefits of making that choice? **Knowing you had choices, what time did you choose to get up at the time you did? What did you “give up”? 2. Compare your chart with your neighbor and be ready to discuss

  18. Decision-Making table Benefits foregone All the benefits of sleeping late! Reflection Looking back, do you still feel you made the best decision?

  19. Lecture 1A – Value, Utility, and Wealth • Value is the worth expressed in dollars and cents. Scarcity by itself is not enough to create value, it must also have utility. • Utilityis a good’s or service’s capacity to provide satisfaction, which varies with the needs and wants of each person. • Wealth is the accumulation of goods, that are tangible, scarce, useful, and/or transferable. Wealth does not include services.

  20. Paradox of Value • Why is water, which is so essential to life so cheap? • Why are diamonds, which are not essential to life so expensive? >The answer is SCARCITY. Water is plentiful but diamonds are rare. SCARCITY+UTILITY=VALUE

  21. Trade Offs and Opportunity Cost • Trade offs are the alternative choices people face in making an economic decision. • Opportunity Cost is the cost of the next best alternative among a person’s choices. The opportunity cost is the money, time, or resources a person gives up, or sacrifices, to make his final choice. Opportunity Cost

  22. Production Possibilities • The production possibilities frontier /curve diagram illustrates the idea of opportunity cost. (PPC / PPF) • It shows the combination of TWO goods and/or services that can be produced when ALL productive resources are used. • (Note: The diagram only shows a combination of TWO things to keep things simple. Besides, three would look very weird.)

  23. You have 100 acres of land to produce wine and/or cotton. • This diagram shows that the more wine we produce, the less cotton we can produce. The more cotton we produce, the less wine we can produce. There is always a trade off! 100% Wine Not Possible PPC Under utilized resources (inefficient) 100% Cotton

  24. Homework –Planning a Dance Opportunity Cost worksheet • Under “Group” put your name ( you are Row 1 ; ) You plan the Dance filling in the $ amount for each of the 3 categories and then write the total $ amount under “Project” (Total Spent) ***(must be = or under your budget of $9,635) • Next, fill in 3 more rows for the Dance by seeing what 3 of your classmates did for their Dance planning (Put their Name under “Group”)

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