Chapter 1 Notes

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Chapter 1 Notes

  1. 1. Chapter 1 Notes • Section 1 • Section 2 • Section 3
  2. 2. Jumpstart Assignment • How would you define the term economics?
  3. 3. Today’s Agenda • Jumpstart – What is economics? • Notes – Chapter 1, Sec. 1 and 2 • Factors of Production Poster
  4. 4. What is Economics? • Economics is about choices!!!!!!!!! • People have to make choices because they deal with scarcity.
  5. 5. Scarcity • Unlimited wants, but limited resources to fulfill those wants. • Shortage vs. Scarcity – producers can’t meet current demand (temporary), vs. scarcity always exists.
  6. 6. 4 Factors of Production • Land – natural resources, ex. Trees, water, earth • 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 and services
  7. 7. Land Labor Capital Entrepreneurship Factors of Production at the Krusty Krab
  8. 8. 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
  9. 9. Economic Decision Making • Decision making grids and thinking at the margin. • Mr. Hornbeck’s economic decision
  10. 10. Jumpstart Assignment • What did you do last night? What was your opportunity cost of doing whatever you did last night? Explain. • If you don’t know what opportunity cost is, look at the definition on page 9 in your textbook.
  11. 11. Production Possibilities Curve • A graph showing alternative uses of an economy’s resources. • 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.
  12. 12. 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.
  13. 13. Classwork - Chapter 1 Review • Page 20-21 all questions (1-21) • Jeopardy Review on Monday • Chapter 1 Test Monday

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