• How would you define the term
• Jumpstart – What is economics?
• Notes – Chapter 1, Sec. 1 and 2
• Factors of Production Poster
What is Economics?
• Economics is about choices!!!!!!!!!
• People have to make choices
because they deal with scarcity.
• Unlimited wants, but limited resources to
fulfill those wants.
• Shortage vs. Scarcity – producers can’t meet
current demand (temporary), vs. scarcity
4 Factors of Production
• Land – natural resources, ex. Trees, water,
• Labor – effort devoted by people
• Capital – human-made resources used to
produce other goods and services
- Physical Capital – buildings and tools
- Human Capital – skills of workers
• Entrepreneurs – individuals who organize the
factors of production to produce new goods
Factors of Production at the Krusty Krab
Trade-Offs and Opportunity Costs
• Tradeoffs – all the alternatives we
give up whenever we make a choice
• Opportunity Cost – the cost of the
most desirable alternative
Economic Decision Making
• Decision making grids and thinking at the
• Mr. Hornbeck’s economic decision
• What did you do last night? What was your
opportunity cost of doing whatever you did last
• If you don’t know what opportunity cost is, look
at the definition on page 9 in your textbook.
Production Possibilities Curve
• A graph showing alternative uses of an
• A PPC graph shows alternative ways that
an economy can use its resources.
• The production possibilities frontier is the
line that shows the maximum possible
output for that economy.
Production Possibilities Frontier
• Efficiency means using resources in such a way
as to maximize the production of goods and
services. A point on the PPF.
• Underutilization – a point inside the PPF.
• Growth – a point outside the PPF.
• Law of Increasing Costs – as production
switches from one item to another, more and
more resources are necessary to increase
production of the 2nd item.
Classwork - Chapter 1 Review
• Page 20-21 all questions (1-21)
• Jeopardy Review on Monday
• Chapter 1 Test Monday