Economics is the study of how individuals and societies make choices to satisfy needs and wants using limited resources. It examines microeconomic decisions by individuals and households as well as macroeconomic issues like GDP, unemployment, and inflation for entire economies. The four factors of production that resources must be combined with are natural resources, human resources, capital resources, and entrepreneurship.

1. Everyday Economics
California State Standard 12.1: Students understand
common economic terms and concepts and economic
reasoning.
Learning Objective: The purpose of this lesson is to introduce
basic economic terms and have students understand what
economics is, why we study it, and importance of
economics in both the world and their everyday lives using
real life examples.

2. Apple iPhone 5 VS. Samsung Galaxy S III:
Which is better?
iPhone 5 Galaxy SIII
• $199 with 2 year contract • Cheaper than the iPhone!
• Apple / iOS • Android
• LTE • LTE
• Siri • S voice
• Slim, compact design • More memory
• 7.6mm thick, metal casing, • Wider display
non-removable battery • Longer battery life
• Overall better camera (front- • 8.6mm thick, plastic casing,
facing HCD better low-light removable battery
performance)
• Siri
• Available in black and white • Available in white, black, blue,
• Restricted file transfers red, grey and brown
• More games • Free file transfer
• Better media player

3. What is Economics?
 Economics is the study of
choices that people make to
satisfy their needs and wants.
 Economics is a social science. It
focuses on human behavior!
 Why is it important?
 You can’t have it all, so you must
make choices!
 Economics is highly relevant to
every aspect of your life.

4. Some Principles of Economic
Thinking…
 Individuals act to make
themselves as well off as possible
 Everything has a cost
 All actions have consequences
(intended / unintended)
 People’s choices influence the
value of goods and services

5. 2 kinds of Economics
 Microeconomics is the study of choices
made by individual economic actors
(households, companies, individual
markets).
 Macroeconomics is the study of the
behaviors of entire economies (all the
sectors of the US economy)
 Looking at the decision-making of an
economy as a whole
 Examples of macroeconomic topics:
unemployment, inflation, deflation,
national output (GDP)…

6. Economic Decision-makers
 Consumers are people who
decide to buy things based on
needs and wants.
 Producers are the people who
make things that satisfy
consumers’ needs and wants
 Simply said, consumers choose
what to buy, and producers
choose what to provide and
how to provide it.
 This is the basis of all economic
systems!

7. How do you make decisions?
 Based on goods and services
or simply products.
 Goods are physical objects
that can be purchased.
 Services are actions or
activities performed for a fee.
 Some other examples?

8. Economic Resources
 A resource is anything that people use to make or obtain
what they need or want. In other words, resources are
needed to produce the goods and services consumers
want.
 Resources are also called Factors of production
 A resource is only a factor of production when it is scarce or
limited.

9. Factor #1: Natural Resources
 Items provided by nature to
produce goods and services.
 Only considered a factor of
production when it is scarce and
some payment is necessary for its
use.
 Is air a natural resource?

10. Factor #2: Human Resources
 Any human effort used during production.
 Intellectual or physical

11. Factor #3: Capital Resources
 Any man-made good produced and used to make other
goods and services.
 Capital resources = CAPITAL GOODS + MONEY SPENT TO
BUY CAPITAL GOODS

12. Capital vs. Consumer goods
 Business use VS. personal use
 Some products can be either
capital goods or consumer
goods, depending on how they
are used!
 Technology as a capital good
(technology for business use)
 Technology is the use of
technical knowledge and
methods to create new products
or make existing products more
efficiently.

13. Factor #4: Entrepreneurship
 The combination of
organizational abilities and risk
taking involved in starting a new
business / creating a new
product.
 Goal: To make something of
value (whether it be a good or
service) to maximize profits
 An entrepreneur must develop a
new mix of the 4 factors of
production to create a valuable
product.

14. Class Activity:
 Groups of 3-4
 Relate at least 7 key terms to a
Lakers game at the Staples
Center.
 Some questions to think about…
 Who are the consumers /
producers?
 What kinds of goods / services
are provided?
 What factors of production are
considered before, during and
after a basketball game?