Hi! My name is Stanand today I am goingto teach you abouteconomics.Economics is thestudy of the making,buying, and selling ofgoods or services.
What does barter mean?These days people usuallyuse money to get what theywant. Before there wasmoney, people had to barterto get what they wanted. Tobarter means “to trade”.
Want Some people wereto good hunters, sometrade were craftsmen, andwith some were farmers.me? One person might have traded five rabbits for milk and eggs. Eventually people wanted something smaller to carry around as money. People started using coins, as well as paper money for trade.
Yesterday, when I waswalking through town, I Bubba’s Ice Creamdecided to go to“Bubba’s Ice Cream”.My friend Diana worksthere. Diana provides aservice to me becauseshe serves me icecream. A service isany kind of workperformed for others.The ice cream is agood. A good issomething you can feel,or any kind ofmerchandise.
1)Look at thepictures on 2)the right.Which ofthese pictures 3)show goodsand which 4)ones showservices?
I asked Diana for a doubleI’m sorryStan! scoop of my favorite kind of ice cream: mint chocolate chip. “I am sorry Stan, we are all out of that flavor”, she said. Disappointed, I settled for vanilla.
What is supply and demand? 100 The supply of mint 90 chocolate chip ice 80 70 cream at “Bubba’s” 60 was gone because itGallons 50 was in high demand 40 30 (wanted) by many 20 10 customers. Look at 0 the chart on the left vanilla choc. straw. mint choc. to see what flavors are in supply at Flavors “Bubba’s Ice Cream”.
Diana asked me if Iwould like my vanilla icecream in a cup or acone. I asked for acone. Diana said I waslucky because therewas only one more coneavailable. The little boybehind me in linewailed, “I wanted my icecream in a cone!” I toldDiana that he couldhave the last cone, andthat I would have minein a dish with chocolatesyrup.
There was ascarcity of cones 1)at Bubba’s.Scarcity meansthat there arelimited resources,and therefore, 2)people mustmake choices.Look at thepictures on the 3)right. Whichpictures show ascarcity?
After I finished my ice cream, I said goodbyeto Diana and left. In the street I heard twochildren singing a song to the tune of “YouAre My Sunshine”. It went like this: “We are consumers! We are consumers! We are so happy when we can shop! We are consuming goods and services, But our wants just will not stop!”
I found myself singing along to the tune. When we were finished singing I asked, “Where are you two going?”The boy, whose namewas Andy, answered:“We’ve saved up all Toy Storeour money and todaywe are going to thetoy store! My sisterSara wants to buyeither a rabbit or abike and I want to buyeither a basketball netor a skateboard”.
What are producers and consumers?The two children in this example areconsumers. A consumer is anyonewho buys a good or a service.The toy store owner in this example is aproducer. A producer is anyone whomakes or grows a good or performs aservice.
What is opportunity cost?Andy had $65.00 Sara had enoughto spend at the money for eithertoy store. The the rabbit or thebasketball net bike. She decidedcost $50.00, so to buy the bikehe had to buy that because then sheinstead of the could ride bikesskateboard, which with her friendscost $75.00. after school.
Opportunity Opportunity cost is Costs the process of choosing one good or service over another. The item that you don’t pick is the opportunity Purchases cost. The rabbit is Sara’s opportunity cost and the skateboard is Andy’s opportunity cost.
What is a profit?What Andy didn’t realize when hebought his basketball net was thatthe toy store owner made a largeprofit off of the sale. The toy storeowner spent $30.00 to make thebasketball net. Andy bought it for$50.00. The toy store owner madea profit of $20.00.
What is a loss?The toy store owner lost moneywhen Sara purchased the bike.The owner made the bike for$80.00, but sold it to Sara foronly $65.00. The toy storeowner lost $15.00.
After the children left the toy store I decidedto stay and have a look around. In the front ofthe store there was a magnificent toy car. “Wow”, I exclaimed, “what a neat car! Did you make it yourself?” The toy store owner explained that it was designed by a car company, put together by Mattel, a toy company, and painted by himself. “Painting is my specialty”, he said.
What is specialization?The toy store owner counted onothers to do the necessary work toconstruct the toys he sold, but thenhe would paint the toys himself.Specialization is when anindividual or a companyspecializes in doing one part of atask, and relies on others tocomplete the other parts.
What is interdependence?Interdependence is whenpeople depend on one another.Specialization results ininterdependence.
I said goodbye toJohnson Elementary School the toy store owner and continued on my walk through town. I passed the elementary school as I rounded the corner. Public schools are services provided by the government and paid for by taxes.
What are taxes?Taxes are the money that thegovernment collects from individuals andbusinesses to pay for public goods andservices.Andy and Sara both paid a 4.5% salestax when they bought their toys. Andypaid an extra $2.25 in tax, for a total of$52.25. Sara spent $2.93 in sales taxfor a total of $67.93.People also pay an income tax. Anincome tax is a percentage of moneytaken out of your income.
I passed the school and saw my friendCole walking down the street. “How areyou today?”, I asked Cole. “I am fantastic! I just thought of a new idea: a bowling ball that expands as you throw it so that it is guaranteed to knock down every pin! I am going to be famous!”
What is an entrepreneur?Cole is an entrepreneur. Anentrepreneur is a person whocomes up with a product or service,or a better way to produce one. Hefound the resources, the money,and the time to produce a newproduct.
I wished Colegood luck andcontinued onmy way. Onthe next twoblocks were twopopcorn stands. They bothlowered theirprices!
What is free enterprise?Both popcorn standslowered their pricesbecause of free Popcornenterprise. Free $0.50---enterprise meanscompetition. NowCompanies compete $0.25!with one another to getthe most customers,and therefore, make themost money. I decided Popcornto buy popcorn from the $0.50---first popcorn stand, Nowbecause their price was $0.30!the lowest.
Goodbye!This completes mylesson oneconomics! I hopeyou enjoyed thetour. Economics isan important part ofour lives. Think ofall of the ways youuse economicseveryday!
ReferencesText Information:Think Quest Junior: “Econopolis” [Online] Availablehttp://tqjunior.advanced.org/3901/ Copyright 1997. AdvancedNetwork and Services, Inc.Pocket Dictionary for Economics. Available through VirginiaCommonwealth Center for Economic Education (nocopyright).The Economic Songbook: Old Tunes with an EconomicTwist. “We Are Consumers!” Copyright 1997, Martha C.Hopkins. James Madison University Center for EconomicEducation.Graphics Information:Microsoft Clip Gallery 3.0 (no sitations)#1 Free Clip Art. [Online Graphics]. Availablewww.1cli[part.com/ Copyright 1999 #1Free Clip Art