ECONOMIC

S
By SILVESTRE M.
CAOILI
M

INDIOS ARE BLIND

FOLLOWERS.

OF MONEY

ga
Lin Bu
ya lag
n a ,
!!! .

Economics

..
ho
i.. r
H lve y!
Si wa
a

TRIVIA

There is not enough of something to go around ?

A) Consumed
B) Diminished
C) Poverty
D) Scarcity
E) Shortage

ANSWER

There is not enough of something to go around ?

A) Consumed
B) Diminished
C) Poverty
D) Scarcity
E) Shortage

http://www.bized.co.uk

Question

What comes to
your mind when
you hear the word
SCARCE?
Copyright 2006 Biz/ed

Scarcity
Definition
A situation

in which the amount

of something actually available
would not be sufficient to satisfy
the desire for it, if it were
provided free of charge.

Scarcity - Sometimes there is not enough of

something to go around. That item is scarce.
The Ice
Cream
Singers

Oh no! Ice cream is scarce!

I scream, you scream, we all scream

for ice cream! La, la, la, la, la!

.
dy
ea t
R Ge . .
t
se O!

TRIVIA
Economics is ?
A) A situation in which the amount of something actually
available would not be sufficient to satisfy the desire for it
B) A science that deals with the allocation, or use, of
scarce resources for the purpose of fulfilling societys
needs and wants
C) The study of how society manages its scarce
resources
D) The study of choice
E) All of the above

ho
i.. r
H ilve y!
S a
aw

Answer
Economics is ?
A) A situation in which the amount of something actually
available would not be sufficient to satisfy the desire for it
B) A science that deals with the allocation, or use, of
scarce resources for the purpose of fulfilling societys
needs and wants
C) The study of how society manages its scarce
resources
D) The study of choice
E) All of the above

What is Economics?
A science

that deals with the

allocation, or use, of scarce
resources for the purpose of
fulfilling societys needs and wants.
Addison-Wesley

What is Economics?
Scarcity

a basic human dilemma

Limited resources vs. unlimited wants

The human condition requires making choices

Definitions

Mankiws definition

is the study of how society manages its scarce resources

Hedricks definition

of Economics

is how society chooses to allocate its scarce resources among

competing demands to improve human welfare

Alternative definitions
what economists do.
is the study of choice.

What is Economics?
So

then the big two concepts are

that:
Resources are scarce!
Society has unlimited needs and
wants!
Economics decides the best way of
providing one to the other

Needs vs. Wants

Needs

what people
must have to live.
Food
Clothing
Shelter

Wants

the things we
would like to have,
but can live without.

Economics???
Exchange

Barter

To trade one thing for another.

The exchange of goods or service

without money.

Example: I want to trade in my

green disk for a blue one.

Example: Ill give you my cake for

your ice cream.

Three Kinds of
Money

Cash

Checks

Credit Cards

Economic Choice
You make an economic choice when you only have money
for certain items, not all.
Example:
I do not have enough money for both popcorn and a pretzel. I must
choose, so I buy the popcorn. That is my economic choice.

YUM!

Supply and Demand

Supply is the amount
of a good or service
available.

Demand is what
people are willing and
able to buy.

I would like to buy one candy cane, please .

What can I do with my money?

Spend it

Save it

Invest it

Give people money to use to

make more moneys, like in stocks
and bonds.

Goods and Services

Goods

Services

Three types of resources work together in our

economy

Human Resources

Natural Resources

Capital Resources

Natural Resources are things we get from nature.

Oil

Coal

Trees

Water

Human resources are jobs done by humans at

work.

Capital resources are the machines, tools and

buildings needed to do a job.

Producers
Producers make goods or provide services.

Consumers
Consumers use or buy goods and services.

Economic Specialization
Individuals or groups who concentrate on
one type of good or service.

Apple farmer

Carpenter

Interdependence
People need each other for goods and
services.
The Ancient Greeks traded their goods across the
Mediterranean Sea.

Factors of Production

There

are 4 factors that must all be

used to produce anything
Natural Resources (also referred to
as land)

Factors of Production

There

are 4 factors that must all be

used to produce anything
Labor effort of a person for which
they are paid

Factors of Production

There

are 4 factors that must all be

used to produce anything
Capital human-made resources
used to create other goods

Factors of Production

Kinds

of Capital
Physical Capital Also called
Capital Goods, objects that are
used to produce other goods

Factors of Production

Kinds of Capital
Human Capital knowledge or
skills workers get from education
and experience

Factors of Production

There

are 4 factors that must all be

used to produce anything
Entrepreneurship person who
takes a risk in combining the other 3
factors to create a new good

Trivia
1.

Which of the following are factors of

production?
a.
b.
c.
d.

Capital and Land

Scarcity and shortages
Technology and productivity
economics and business decisions

Answer
1.

Which of the following are factors of

production?
a.
b.
c.
d.

Capital and Land

Scarcity and shortages
Technology and productivity
economics and business decisions

Next question
2.

Which of the following is an example of

using physical capital to save time and
money?
a.

hiring more workers to do a job?

b. building extra space in a factory to simplify
production
c. switching from oil to coal to make
production cheaper
d. lowering workers wages to increase profits

Answer is
2.

Which of the following is an example of

using physical capital to save time and
money?
a.

hiring more workers to do a job?

b. building extra space in a factory to simplify
production
c. switching from oil to coal to make
production cheaper
d. lowering workers wages to increase profits

next question
3.

To what part of an industry does a

workers education contribute?
a.
b.
c.
d.

technology
physical capital
human capital
scarce resources

Answer is
3.

To what part of an industry does a

workers education contribute?
a.
b.
c.
d.

technology
physical capital
human capital
scarce resources

next question
4.

Which of the following is an

entrepreneur?
a.

a person who earns a lot of money as a

singer or dancer
b. a person who creates a game and sells it
to a game manufacturer
c. a person who starts an all-organic cleaning
supplies business that employs others
d. a person who works as a highly paid
computer programmer

Answer is
4.

Which of the following is an

entrepreneur?
a.

a person who earns a lot of money as a

singer or dancer
b. a person who creates a game and sells it to
a game manufacturer
c. a person who starts an all-organic cleaning
supplies business that employs others
d. a person who works as a highly paid
computer programmer

Next
5.

What is the difference between a

shortage and scarcity?
a.

A shortage can be temporary or long-term,

but scarcity always exists.
b. A shortage results from rising prices;
scarcity results from falling prices.
c. A shortage is a lack of all goods and
services; scarcity concerns a single item.
d. There is no real difference between a
shortage and scarcity

Answer is
5.

What is the difference between a

shortage and scarcity?
a.

A shortage can be temporary or long-term,

but scarcity always exists.
b. A shortage results from rising prices;
scarcity results from falling prices.
c. A shortage is a lack of all goods and
services; scarcity concerns a single item.
d. There is no real difference between a
shortage and scarcity

next.
6.

What does an economist mean by the

term LAND?
a.

farmland only
b. food crops grown on farmland as well as
the farmland itself
c. goods and services that are produced form
the land
d. all natural resources used to produce
goods and services

Answer is.
6.

What does an economist mean by the

term LAND?
a.

farmland only
b. food crops grown on farmland as well as
the farmland itself
c. goods and services that are produced form
the land
d. all natural resources used to produce
goods and services

Making Economic Decisions

Every

decision we make involves

trade-offs alternatives that we
must give up when we make a
choice
Example

I could stay up for 3

hours playing Computer games,
study, or sleep.

PROFILE
>>>marriage
market
hmmm
1. Do you
agree or
disagree that
economics
guides even
lifes most
personal
decisions???

FIVE appealing VACATION

Destinations

Hawaii

Paris

Dunns River
Falls, Jamaica

Ireland

Alaska

Volunteer: What is
your first choice?
What is your second

Making Economic Decisions

The

most desirable of the options you

pass up is called the Opportunity
Cost
Rank sleep, studying, and playing
video games 1st, 2nd, and 3rd on a list
for what you value the most

Making Economic Decisions

1st

Place is what
you would
choose to do
2nd Place is your
opportunity cost
(you give it up to
do option 1)

Opportunity Cost
Opportunity cost what you must give up
when you make an economic choice.
Example:
I chose the popcorn, so I have to give up the pretzel.
That is my opportunity cost.

Trivia
1.

The economic concept of guns or butter

means that
a.

a person can spend extra money either on sports

equipment or food.
b. a company must decide whether to manufacture
guns or butter
c. a government must decide whether to produce
more or less military or consumer goods
d. a government can buy unlimited military and
civilian goods if it is rich enough

Answer
1.

The economic concept of guns or butter

means that
a.

a person can spend extra money either on sports

equipment or food.
b. a company must decide whether to manufacture
guns or butter
c. a government must decide whether to produce
more or less military or consumer goods
d. a government can buy unlimited military and
civilian goods if it is rich enough

next..
2.

If a person who wants to buy a

compact disc (CD) has just enough money
to buy one, and chooses CD A instead of
CD B, then CD B is the
a.
b.
c.
d.

trade-off
opportunity cost
decision at the margin
opportunity at the margin

answer..
2.

If a person who wants to buy a

compact disc (CD) has just enough money
to buy one, and chooses CD A instead of
CD B, then CD B is the
a.
b.
c.
d.

trade-off
opportunity cost
decision at the margin
opportunity at the margin

next
3.

A decision-making grid is a visual way

of:
a.
b.
c.
d.

examining opportunity costs

selling goods or services
making marginal decisions
identifying shortages

answer
3.

A decision-making grid is a visual way

of:
a.
b.
c.
d.

examining opportunity costs

selling goods or services
making marginal decisions
identifying shortages

next
4.

A decision is made at the margin when

each alternative considers
a.

a different trade-off than the others

b. where the most costly alternative will be.
c. what the all or nothing alternative will be.
d. cost and benefit ranked in progressive
units.

answer
4.

A decision is made at the margin when

each alternative considers
a.

a different trade-off than the others

b. where the most costly alternative will be.
c. what the all or nothing alternative will be.
d. cost and benefit ranked in progressive
units.

GRAPHS.
WHY do

graphs sometimes show

information more clearly than text or
tables?

Production Possibilities
Production

Possibilities Graph
shows alternatives to what an
economy can produce
Lets say we can produce 2
things: Guns and Butter

Production Possibilities

Production Possibilities

Production Possibilities
Graph shows
alternatives to what an
economy can produce
The outer red line
shows the maximum
possible output with
any given
combination
This is the
Production
Possibilities Frontier
(or Curve)

Production Possibilities
To move

from
one point to
another, the
economy must
make tradeoffs

Production Possibilities
Any

point along the line

shows the economy
operating at maximum
efficiency
Any point below the
line is underutilization
they are not getting all
that they could
Any point above the
line is presently
impossible, until new
resources are available

Production Possibilities
Why

does the graph curve instead of

making a straight line?
Law of Increasing Costs as
production increases for one item,
more and more resources are
necessary to increase production of
the second item! The
OPPORTUNITY COST increases

Production Possibilities
Every

resource is best suited for

certain types of goods
Farmland

and cows make butter

Metals and factories make guns and
many times you hear about butter vs.
guns due to military spending on
weaponry using resources
To convert butter production to guns,
you must sell the cows and build new
factories on the land

trivia time
1.

A production possibilities curve shows

the relationship between the production of:
a.
b.
c.
d.

farm goods and factory goods

two types of farm goods
two types of factory goods
any two categories of goods

Answer
1.

A production possibilities curve shows

the relationship between the production of:
a.
b.
c.
d.

farm goods and factory goods

two types of farm goods
two types of factory goods
any two categories of goods

next
2.

The line on a production possibilities

curve showing the relative amounts of two
types of goods produced using all
resources is called the
a.
b.
c.
d.

production possibilities frontier

opportunity cost line
utilization of resources
maximum possible production line

answer
2.

The line on a production possibilities

curve showing the relative amounts of two
types of goods produced using all
resources is called the

a. production possibilities frontier

b.

opportunity cost line

c. utilization of resources
d. maximum possible production line

trivia
3.

The law of increasing costs means that as

production shifts from one item to another,

a.

the cost of production gets cheaper and cheaper.

b. the cost of producing an item stays the same no
matter how many are produced.
c. more and more resources are necessary to
increase production of the second item
d. the land costs of increasing production rise much
more steeply than do the labor costs

answer
3.

The law of increasing costs means that as

production shifts from one item to another,

a.

the cost of production gets cheaper and cheaper.

b. the cost of producing an item stays the same no
matter how many are produced.
c. more and more resources are necessary to
increase production of the second item
d. the land costs of increasing production rise much
more steeply than do the labor costs

answer is
c.

more and more resources are

necessary to increase production of the
second item

and last question

4.

The curve usually seen in a production

possibilities frontier can be explained by:
a.
b.
c.
d.

growth in the economy

underutilization of resources
increasing an economys efficiency
the law of increasing costs

answer
4.

The curve usually seen in a production

possibilities frontier can be explained by:
a.
b.
c.
d.

growth in the economy

underutilization of resources
increasing an economys efficiency
the law of increasing costs

THE END

KEY

1. E
2. A
3. K
4. R
5. D
6. O
7. J
8. H
9. B
10. N

11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

C
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