Econ Notes Ch. 1

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Chapter 1 What Is Economics?
CHAPTER INTRODUCTION SECTION 1 Scarcity and the Science of Economics SECTION 2 Basic Economic Concepts SECTION 3 Economic Choices and Decision Making CHAPTER SUMMARY CHAPTER ASSESSMENT
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Economics and You

The study of economics will help you become a better decision makerit helps you develop a way of thinking about how to make the best choices for you.
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Chapter Objectives
Section 1: Scarcity and the Science of Economics Explain the fundamental economic problem. Examine the three basic economic questions every society must decide.
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Chapter Objectives
Section 2: Basic Economic Concepts Explain the relationship among scarcity, value, utility, and wealth. Understand the circular flow of economic activity.
Chapter Objectives
Section 3: Economic Choices and Decision Making Analyze trade-offs and opportunity costs. Explain decision-making strategies.
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Study Guide
Main Idea
Scarcity forces us to make choices. We cant have everything we want, so we are forced to choose what we want most.
Reading Strategy
Graphic Organizer As you read the section, complete a graphic organizer like the one on page 5 of your textbook by listing and describing the three economic choices every society must make.
Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 5 of your textbook.
Study Guide (cont.)

Key Terms
scarcity economics need want factors of production land capital financial capital labor entrepreneur production Gross Domestic Product (GDP)
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Study Guide (cont.)

Objectives
After studying this section, you will be able to: Explain the fundamental economic problem. Examine the three basic economic questions every society must decide.
Applying Economic Concepts

Scarcity Why is scarcity the basic economic problem that everyone faces?
Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 5 of your textbook.
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Introduction
Do you think the study of economics is worth your time and effort? According to a Harris poll, a huge percentage of Americans think it is. They must know what economists know that a basic understanding of economics can help make sense of the world around us.
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Did You Know?

We witness scarcity with each years hot new toy. Inspired by hunter President Teddy Roosevelt, Americans coveted the teddy bear in 1906. Cabbage Patch dolls were big during the 1980s, as were Tickle Me Elmos in 1996. By 1999 Game Boys Pokmon was the rage with a 10-cent trading card. The most-prized first-edition pocket monsters were in such short supply that they commanded from $8 to $182.
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The Fundamental Economic Problem

Scarcity is the condition where unlimited human wants face limited resources. Economics is the study of how people satisfy wants with scarce resources. Needs are required for survival; wants are desired for satisfaction. Someone has to pay for production costs, so There Is No Such Thing As A Free Lunch (TINSTAAFL).
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Discussion Question
Why do you think scarcity is an issue with the rich as well as the poor?
It is a human trait that few people, regardless of their economic status, are satisfied with what they have.
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Three Basic Questions

What must we produce? Society must choose based on its need. How should we produce it? Society must choose based on its resources. For whom should we produce? Society must choose based on its population and other available markets.
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Figure 1.1
Discussion Question
How might the economic decisions of a mountainous island society differ from those of a mountainous landlocked society? An island society has water resources to consider and likely a more limited population.
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The Factors of Production

Factors of production are resources necessary to produce what people want or need. Land is the societys limited natural resourceslandforms, minerals, vegetation, animal life, and climate. Capital is the means by which something is produced such as money, tools, equipment, machinery, and factories.
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The Factors of Production (cont.)

Labor is the workers who apply their efforts, abilities, and skills to production. Entrepreneurs are risk-takers who combine the land, labor, and capital into new products. Production is creating goods and servicesthe result of land, capital, labor, and entrepreneurs.
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The Factors of Production (cont.)

Figure 1.2
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Discussion Question
Why are entrepreneurs an economys driving force?
Their abilities to start new businesses and introduce new products may reenergize a sluggish economy or strengthen a successful economy.
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The Scope of Economics

Economics deals with the description of economic activityGross Domestic Product, unemployment rate, government spending, tax rates, etc. Analysis looks at the why and how of economic activitywhy prices go up and down, for example, or how taxes affect savings.
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The Scope of Economics (cont.)

Explanation refers to how economists communicate knowledge of the economy and its activities to the societys population. Prediction refers to how yesterdays and todays economic activities advise us of potential future activity.
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Discussion Question
What makes economics a social science?
Economics is a study of human behavior because it looks at the decisions people make and how they react to those decisions.
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Section Assessment
Main Idea Using your notes from the graphic organizer activity on page 5, explain why a society must face the choices about WHAT, HOW, and FOR WHOM to produce. Choices must be made as long as wants are greater than the resources available.
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Section Assessment
(cont.)
Describe the fundamental economic problem.
Scarcity, the condition that results from society not having enough resources to produce all the things people want, is the fundamental economic problem.
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Section Assessment
(cont.)
List the three basic economic questions every society must answer.
Every society must ask what to produce, how to produce, and for whom to produce.
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Section Assessment
(cont.)
Describe the factors of production.
The factors of production are land, capital, labor, and entrepreneurs.
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Section Assessment
(cont.)
List the four key elements of economics.
The four key elements of economics are description, analysis, explanation, and prediction.
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Section Assessment
(cont.)
Synthesizing Information Give an example of a supposedly free item that you see every day. Explain why the item is not really free by stating who or what actually pays for it.
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Section Close
How might the element of prediction in economics be important in your lives?
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Study Guide
Main Idea
An economic product is a good or service that is useful, relatively scarce, and exchangeable.
Reading Strategy
Graphic Organizer As you read the section, describe three different transactions that could take place in the product market. Use a web like the one on page 12 of your textbook to help you organize your answer.
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Study Guide (cont.)

Key Terms
economic product good consumer good capital good service value paradox of value utility wealth market factor market product market economic growth productivity division of labor specialization human capital economic interdependence
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Study Guide (cont.)

Objectives
After studying this section, you will be able to: Explain the relationship among scarcity, value, utility, and wealth. Understand the circular flow of economic activity.

Specialization How does specialization increase production?
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Introduction
Economics, like any other social science, has its own vocabulary. To understand economics, a review of some key terms is necessary. Fortunately, most economic terms are widely used, and many will already be familiar to you.
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Did You Know?

The 20 percent of the worlds people who live in the wealthiest nations consume 86 percent of the worlds goods and services. The 20 percent who live in the poorest nations consume just 1.3 percent.
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Goods, Services, and Consumers

Goods are items that are economically useful or satisfy an economic want. They are tangible and can be classified as consumer/capital and durable/ nondurable. Services are work performed for someone and are intangible. Consumers use goods and services to satisfy wants and needs.
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Discussion Question
Why do you think the United States has been called a society of consumption? Answers will vary. Students should support their opinions with examples.
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Value, Utility, and Wealth

Value is worth expressed in dollars and cents. Scarcity by itself is not enough to create value. For something to have value, it must also have utility. Utility is a goods or services capacity to provide satisfaction, which varies with the needs and wants of each person. Wealth is the accumulation of goods that are tangible, scarce, useful, and transferable to another person. Wealth does not include services.
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Discussion Question
Why might a wealthy society not have as much economic staying power as another wealthy society with a highly skilled labor force? Answers will vary. Students may indicate that wealth is usually based on limited natural resources, whereas labor can produce more goods and services.
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The Circular Flow of Economic Activity

Markets are locations/mechanisms for buyers and sellers to trade. They are classified as local, regional, national, global, and cyberspace. A factor market is where people earn their incomes. Factor markets center on the four factors of production: land, capital, labor, and entrepreneurs. A product market is where people use their income to buy from producers. Product markets center on goods and services.
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The Circular Flow of Economic Activity (cont.)

Figure 1.3
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Discussion Question
How are landlords a part of a factor market? They provide land or property (a factor of production) to consumers in exchange for rent money, which is the landlords source of income.
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Productivity and Economic Growth

Productivity is a measure of the amount of output produced by the amount of inputs within a certain time. Productivity increases with efficient use of scarce resources. Specialization and division of labor may improve productivity because they lead to more proficiency (and greater economic interdependence).
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Productivity and Economic Growth

Investing in human capital improves productivity because when peoples skills, abilities, health, and motivation advance, productivity increases. Economic growth depends on high productivity. Yet, an economys productivity may be affected by its interdependence reliance on others and their reliance on us to provide goods and services.
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Discussion Question
How may economic interdependence be a strength of an economy? A weakness? Answers will vary. Students may indicate that the economy may gain larger, more diverse markets, leading to greater income and productivity. But the economic problems of those additional markets (customers or suppliers) may adversely affect the economys production output or customer base.
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Section Assessment
Main Idea Using your notes from the graphic organizer activity on page 12, explain the different transactions that take place in the product market. The buying and selling of goods and services, and using money from sales to produce more goods takes place in the product market.
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Section Assessment
(cont.)
Discuss the relationship among scarcity, value, utility, and wealth.
Answers will vary.
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Section Assessment
(cont.)
Describe the circular flow of economic activity.
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Section Assessment
(cont.)
Explain why productivity is important to economic growth.
When productivity goes up, more output is produced with the same amount of inputs in the same amount of time.
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Section Assessment
(cont.)
Making Comparisons What is the difference between a durable good and a nondurable good? A durable good lasts three or more years when used on a regular basis. A nondurable good lasts for less than three years.
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Section Assessment
(cont.)
Drawing Conclusions In what way do businesses and households both supply and demand in the circular flow model? Businesses supply goods while demanding resources; households supply labor and income while demanding goods.
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Section Close
Discuss ways in which your community, state, or region specializes in the goods and services it provides. Analyze and evaluate the areas these resources come from. What makes them unique?
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Study Guide
Main Idea
Trade-offs are present whenever choices are made.
Reading Strategy
Graphic Organizer As you read this section, complete a graphic organizer similar to the one on page 19 of your textbook by explaining what you need to know to become a good decision maker.
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Study Guide (cont.)

Key Terms
trade-off opportunity cost production possibilities frontier cost-benefit analysis free enterprise economy standard of living
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Study Guide (cont.)

Objectives
After studying this section, you will be able to: Analyze trade-offs and opportunity costs. Explain decision-making strategies.

Opportunity Costs How are your decisions measured in terms of opportunity costs?
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Introduction
The process of making a choice is not always easy. Because resources are scarce, consumers need to make wise choices. To become a good decision maker, you need to know how to identify the problem and then analyze your alternatives. Finally, you have to make your choice in a way that carefully considers the costs and benefits of each possibility.
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Did You Know?

Economists reward their greatest for breakthrough discoveries. The 1999 Nobel Prize for Economics went to Robert A. Mundell, a Canadian economist at New Yorks Columbia University, for his careerlong work in international currency exchange rates, vital in todays global marketplace. The prize is worth a million dollars in U.S. currency.
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Trade-Offs and Opportunity Cost

Trade-offs are the alternative choices people face in making an economic decision. A decision-making grid lists the advantages and disadvantages of each choice. Opportunity cost is the cost of the next best alternative among a persons choices. The opportunity cost is the money, time, or resources a person gives up, or sacrifices, to make his final choice.
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Trade-Offs and Opportunity Cost (cont.)

Figure 1.5
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Discussion Question
Why do you think economists believe opportunity cost is an important factor to consider in addition to monetary cost? The money, time, or resources given up when one choice is made rather than another are just as important as the monetary cost of the choice that was made.
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Production Possibilities
The production possibilities frontier diagram illustrates the concept of opportunity cost. It shows the combinations of goods and/or services that can be produced when all productive resources are used. The line on the graph represents the full potentialthe frontierwhen the economy employs all of these productive resources. Identifying possible alternatives allows an economy to examine how it can best put its limited resources into production.
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Production Possibilities (cont.)

Considering different ways to fully employ its resources allows an economy to analyze the combination of goods and services that leads to maximum output. An economy pays a high cost if any of it resources are idle. It cannot produce on its frontier and it will fail to reach its full production potential. Economic growth made possible by more resources, a larger labor force, or increased productivity causes a new frontier for the economy.
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Figure 1.6 The Production Possibilities Frontier
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Discussion Question
How might economic growth stimulate greater production possibilities? Answers will vary. Students may indicate that with a larger labor force, more goods and services are created; newly discovered natural resources open up new products and services.
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Thinking Like an Economist

Building simple models helps economists analyze or describe actual economic situations. Cost-benefit analysis helps economists evaluate alternatives by looking at each choices cost and benefit. Taking small, incremental steps in implementing an economic decision helps economists test whether the estimated cost of the decision was correct.
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Discussion Question
What behaviors and personality traits might you observe in the most successful economists? Answers will vary. Students should support their opinions with a rationale.
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The Road Ahead

Studying economics will help us know how the economy works on a daily basis. It helps us understand a free enterprise economy, where people and privately owned businesses rather than the government make the majority of the economic decisions. The study of economics helps us to become better decision makers. The world of economics is complex and dynamic, as is our society.
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Discussion Question
What single economic goal have you set for yourself as a result of your study of economics? Answers will vary. Students must indicate an economic goal rather than an educational goal.
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Section Assessment
Main Idea Using your notes from the graphic organizer activity on page 19, explain what people try to achieve when they make decisions or trade-offs. When making economic decisions, people try to get the most value for their investment, whether it be time, money, or something else.
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Section Assessment
(cont.)
Describe the relationship between trade-offs and opportunity costs.
All economic decisions involve tradeoffs. The opportunity cost of a choice is the cost of the next best use of money, time, or resources.
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Section Assessment
(cont.)
List the decision-making strategies that economists use.
Economists use the circular flow diagram, production possibilities frontier, and cost-benefit analysis.
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Section Assessment
(cont.)
Explain why the study of economics is important to the American free enterprise system. Economic issues are an important part of many political campaigns. An understanding of the issues will help a citizen decide how to vote in an election.
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Section Assessment
(cont.)
Making Generalizations Study the decision-making grid on page 20 of your textbook. Explain the advantages of using such a grid to evaluate alternatives. Such a grid helps organize and explain the various choices when decision making.
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Section Close
How might the production possibilities frontier change if new technology were applied to the production of guns but not to the production of butter?
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Section 1: Scarcity and the Science of Economics

The basic economic problem of scarcity is due to the combination of peoples seemingly unlimited wants and relatively scarce resources. In a world of scarce resources, There Is No Such Thing As A Free Lunch (TINSTAAFL). Because of scarcity, society has to decide WHAT, HOW, and FOR WHOM to produce. Land, capital, labor, and entrepreneurs are the four factors of production required to produce the things that people use.
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Section 1: Scarcity and the Science of Economics (cont.)

Entrepreneurs are risk-taking individuals who go into business in order to make a profit; they organize the other factors of production. The scope of economics deals with description, analysis, explanation, and prediction.
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Section 2: Basic Economic Concepts

Consumers use goods and services to satisfy their wants and needs. Something has value when it has utility and is relatively scarce. Wealth consists of products that are scarce, useful, and transferable to others, but wealth does not include services, which are intangible. Markets link individuals and businesses in the circular flow of economic activity; the factors of production are traded in factor markets; goods and services are traded in the product markets.
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Section 2: Basic Economic Concepts

(cont.)
Productivity and investments in human capital help economic growth; investments in human capital are among the most profitable of all investments. Increases in specialization and division of labor cause more economic interdependence.
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Section 3: Economic Choices and Decision Making

The opportunity cost of doing something is the next best alternative, or trade-off, that you give up. A decision-making grid can be used to help evaluate alternatives. A production possibilities frontier shows the various possible combinations of output that can be produced when all resources are fully employed; production inside the frontier occurs when some resources are idle or are not being used to their maximum capability.
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Section 3: Economic Choices and Decision Making (cont.)

When economic growth takes place, the production possibilities frontier shifts outward, showing that more products are produced than before. The economic way of thinking involves simplification with model building, cost-benefit analysis to evaluate alternatives, and incremental decision making. The study of economics will make you a better decision maker and will help you to understand the world around you; however, the study of economics will not tell you which decisions to make.
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Section 3: Economic Choices and Decision Making (cont.)

The study of economics helps people understand how a free enterprise economy makes the WHAT, HOW, and FOR WHOM decisions.
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Identifying Key Terms

Choose the letter of the term that best completes the following sentences.
B ___ Economic products designed to satisfy peoples wants and needs are called _____ . J ___ The _____ of a CD player can be expressed in dollars and cents. I ___ Haircuts, repairs to home appliances, and entertainment are examples of _____ . A. B. C. D. E.
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capital goods consumer goods consumers factors of production utility
F. G. H. I. J.
human capital opportunity cost scarcity services value
Click the mouse button or press the Space Bar to display the answer. The Chapter Assessment is on pages 2829.
Identifying Key Terms (cont.)

H ___
_____ arises because society does not have enough resources to produce all the things people would like to have.
G ___ The _____ of going to a football game instead of working would include the money not earned at your job. F ___ _____ is the sum of the skills, abilities, health, and motivation of people. A. capital goods F. human capital B. consumer goods G. opportunity cost C. consumers H. scarcity D. factors of production I. services E. utility J. value
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Identifying Key Terms (cont.)

E ___ _____ is another name for the capacity of a product to be useful. A ___ The only factors of production that are themselves the result of earlier production are _____ . D Land, capital, labor, and entrepreneurs are _____ . ___ C ___ People who use goods and services to satisfy their wants and needs are called _____ . A. B. C. D. E.
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capital goods consumer goods consumers factors of production utility
F. G. H. I. J.
human capital opportunity cost scarcity services value
Reviewing the Facts

Identify the cause of scarcity.
having only limited resources to meet seemingly unlimited wants
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Reviewing the Facts (cont.)

List the three basic economic questions that every society must face. WHAT to produce? HOW to produce? FOR WHOM to produce?
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Describe the factors of production required to deliver a service like education. land; land itself and natural resources; capital: school building, computers, financial capital; labor: teachers, other workers, publishers; entrepreneurs: people who devise new products and methods of delivery of educational material.
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Explain why economics is considered a social science.
It deals with peoples behavior as they cope with scarcity.
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Describe the relationship between goods, services, and consumers.
Consumers use goods and services to satisfy their wants and needs.
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Explain why services are excluded from the measure of wealth.
because they are intangible and it is difficult to measure their value accurately
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Distinguish between product markets and factor markets.
Product markets are producers offering goods and services for sale. Factor markets are productive resources being bought and sold.
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Explain why economists argue that productivity is important.
Productivity is the efficient use of productive resources. The more efficiently productive resources are used, the greater the number of goods and services that are produced.
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Describe the nature of an opportunity cost.
the cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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Identify the economic concept illustrated by the production possibilities frontier. opportunity cost
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Describe incremental decision making.
making a decision in small stages or steps so that the decision can be reversed without too much being lost
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Explain why economic education is important.
It helps people become better decision makers.
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Thinking Critically
Understanding Cause and Effect Suppose that Alpha, shown in Figure 1.6 on page 23, decided to produce more guns and less butter. What would Alpha have to do to make the change? What would be the opportunity cost of producing more guns? What conditions would have to be met for the new mix of guns and butter to be on the production possibilities frontier? Resources have to be shifted from guns to butter. The opportunity cost of producing more guns is the production of less butter. All of Alphas resources would have to be employed.
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Thinking Critically (cont.)

Understanding Cause and Effect Copy the two diagrams of the production possibilities frontiers shown shown on page 29 of your textbook. Then, write captions that explain what each diagram is showing. The diagram on the left shows increase in productivity/resources in gun industry; the diagram on the right shows increase in resources/ productivity in butter industry.
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Applying Economic Skills

Scarcity What three choices must a society make because of scarcity?
WHAT to produce? HOW to produce? FOR WHOM to produce?
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Applying Economic Skills (cont.)

Utility How is a products utility related to its value?
For a product to have value, it must have utility.
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Applying Economic Skills (cont.)

Cost-Benefit Analysis How would you apply the concept of costbenefit analysis to the decision to finish high school? To further your education? Make a matrix listing choices and the costs and benefits (including time, money, and satisfaction) of each educational choice.
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Suppose that scientists invented a car that ran efficiently on water. Explain, in terms of scarcity, how this might affect the price of water. Explain, in terms of utility, how this might affect the price of gasoline. The more water that is needed, the scarcer it becomes, and so the price of water might go up. The less gasoline that is needed, the less utility it has, and so the price of gasoline might go down.
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Continued on next slide.
Create a television-viewing log chronicling the number and types of economics-related items presented on the nightly news. Watch national newscasts on the networks, CNN national newscasts, and local newscasts. Record the date, the subject of the item, and the length of time devoted to the item.
Explore online information about the topics introduced in this chapter.

Click on the Connect button to launch your browser and go to the Economics: Principles and Practices Web site. At this site, you will find interactive activities, current events information, and Web sites correlated with the chapters and units in the textbook. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to http://epp.glencoe.com/sec/socialstudies/economics/econ principles2005/index.php
Explore online information about the topics introduced in this chapter.

Click on the Connect button to launch your browser and go to the BusinessWeek Web site. At this site, you will find up-to-date information dealing with all aspects of economics. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to http://www.businessweek.com
Durable Goods Orders The Department of Commerces report on durable goods orders highlights the number of new orders placed with domestic manufacturers for good intended to last over three years. The report is divided into broad categories; these include defense, nondefense, and capital and noncapital goods. Noncapital goods are generally of the consumer spending variety and include automobiles and large appliances. Capital goods tend to be of the investment spending nature, while defense goods indicate government spending.
United States Leads in Entrepreneurs Just as students in the United States participate in programs on entrepreneurship, students in other countries study the same principles. In Ireland, students aged 12 to 18 can be part of the Young Entrepreneurs Programme. The purpose of the program is to encourage students to learn about starting their own businesses. Students sometimes sell their products or services to other students and sometimes to the general public. During the 19961997 school year, more than 7,000 students in 250 schools took part in the program, starting about 2,300 businesses.
Wealth in Other Cultures Personal wealth has been viewed in a variety of different ways in cultures around the world. In the past, the camel, an animal indispensable for journeys across desert regions, was a highly prized possession in many Arab countries. Wealth and social standing were measured, in part, by the number of camels a person owned.
The term conspicuous consumptionwhich means the use of a good or service to impress otherswas coined by economist and social critic Thorstein Veblen in his study The Theory of the Leisure Class (1899).
Stock Trading One area of economic activity that computers and the Internet have revolutionized is stock trading. For certain stocks, traders no longer have to use a stockbroker to buy or sell stock. Instead, using computers, they can trade directly with one another. They also use certain software programs to help them analyze stocks. Using a number of sites on the Internet, traders can keep track of stocks as they are being bought and sold, and keep track of the buyers and sellers as well.
The Role of the Entrepreneur

Alexis de Tocqueville, a French traveler, wrote about his travels in the United States during the 1830s. His book, Democracy in America, a twovolume study of the American people and their institutions, is still relevant today. Read the BusinessWeek Newsclip article on page 11 of your textbook. Learn why Democracy in America is still relevant today.
Continued on next slide. This feature is found on page 11 of your textbook. Click the Speaker button to listen to an audio introduction.

Summarizing Information What are the entrepreneurial qualities of small companies? They are nimble, innovative, close to the customer, and quick to the market.
Continued on next slide. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 11 of your textbook.

Finding the Main Idea What does the writer mean by diseconomies of scale? The writer is referring to the slowness to change and the high costs that can result when companies become too large.
Click the mouse button or press the Space Bar to display the answer. This feature is found on page 11 of your textbook.
What Is Economics? Your Role As A Consumer
Click on a hyperlink to choose that topic.
Economics and You

Video 2: What Is Economics?
After viewing What Is Economics?, you should be able to: Define economics. Give an example of economic scarcity. Distinguish between needs and wants. Discuss the trade-offs involved in allocating scarce resources. Continued on next slide.
Economics and You

Video 2: What Is Economics?
Side 1 Disc 1 Chapter 2

Click the Videodisc button anytime throughout this section to play the complete video if you have a videodisc player attached to your computer. Click the Forward button to view the discussion questions and other related slides. Click inside the box to play the preview.
Economics and You

Video 2: What Is Economics? What is economic scarcity?
Economic scarcity occurs when available resources are not sufficiently abundant to satisfy the total demand for them.
Economics and You

Video 9: Your Role As A Consumer After viewing Your Role As A Consumer, you should be able to: Compare and contrast disposable and discretionary income. Identify aspects of wise consumer decision making. Describe some federal consumer protection activities. Continued on next slide.
Economics and You

Video 9: Your Role As A Consumer

Click the Videodisc button anytime throughout this section to play the complete video if you have a videodisc player attached to your computer. Click the Forward button to view the discussion questions and other related slides. Click inside the box to play the preview.
Economics and You

Video 9: Your Role As A Consumer What is the difference between disposable income and discretionary income? Disposable income is the money left after taxes that is spent on basics. Discretionary income is the money left over for nonessentials.
Sequencing and Categorizing Information

Sequencing involves placing facts in the order in which they occur. Categorizing entails organizing information into groups of related facts and ideas. Both actions help you deal with large quantities of information in an understandable way.
Continued on next slide. This feature is found on page 26 of your textbook.

Learning the Skill
Look for dates or clue words that provide you with a chronological order: in 2004, the late 1990s, first, then, finally, and so on. If the information does not happen in sequence, you may categorize it instead. To do so, look for information with similar characteristics. List these characteristics, or categories, as the headings on a chart.
Continued on next slide. Click the mouse button or press the Space Bar to display the information. This feature is found on page 26 of your textbook.

Learning the Skill (cont.)
As you read, fill in details under the proper category on the chart.

Practicing the Skill
Read the excerpts on page 26 of your textbook, compare the information they contain, then answer the questions on the following slides.

Which passages information can be organized sequentially? List the main ideas in chronological order. Excerpt A; the U.S. dominated the world steel market (1950s, 1960s), foreign competition cut into U.S. dominance (1980s), U.S. steel production improved (1990), work-hours required to produce a ton of steel dropped in the U.S. (1990), beginning in 1947 trade agreements protected U.S. jobs. Continued on next slide.

What categories can you use to organize the information in the other excerpt? Answers will vary.
Adam Smith
17231790
Click the picture to learn more about Adam Smith. Be prepared to answer the questions that appear on the next two slides.
Adam Smith
17231790
Summarizing Ideas Summarize Smiths contribution to economic thought.
Answers will vary.
Continued on next slide. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 18 of your textbook.
Adam Smith
17231790
Synthesizing Information Explain how Smiths ideas are evident in the workings of the American economy.
The United States has a market economy, composed of a myriad of small markets, each of which operates essentially in the way Smith described; buyers and sellers operate in their own best interests.
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Presentation Plus! Economics: Principles and Practices Copyright by The McGraw-Hill Companies, Inc. Developed by FSCreations, Inc.

Chapter 1 What Is Economics?

Economics and You

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Study Guide (cont.)

Study Guide (cont.)

Applying Economic Concepts

Did You Know?

The Fundamental Economic Problem

Three Basic Questions

The Factors of Production

The Factors of Production (cont.)

The Factors of Production (cont.)

The Scope of Economics

The Scope of Economics (cont.)

Describe the fundamental economic problem.

Describe the factors of production.

The factors of production are land, capital, labor, and entrepreneurs.

List the four key elements of economics.

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Study Guide (cont.)

Study Guide (cont.)

Applying Economic Concepts

Did You Know?

Goods, Services, and Consumers

Value, Utility, and Wealth

The Circular Flow of Economic Activity

The Circular Flow of Economic Activity (cont.)

Productivity and Economic Growth

Productivity and Economic Growth

Discuss the relationship among scarcity, value, utility, and wealth.

Answers will vary.

Describe the circular flow of economic activity.

Explain why productivity is important to economic growth.

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Study Guide (cont.)

Study Guide (cont.)

Applying Economic Concepts

Did You Know?

Trade-Offs and Opportunity Cost

Trade-Offs and Opportunity Cost (cont.)

Production Possibilities (cont.)

Production Possibilities (cont.)

Production Possibilities (cont.)

Production Possibilities (cont.)

Thinking Like an Economist

The Road Ahead

Describe the relationship between trade-offs and opportunity costs.

List the decision-making strategies that economists use.

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Section 1: Scarcity and the Science of Economics

Section 1: Scarcity and the Science of Economics (cont.)

Section 2: Basic Economic Concepts

Section 2: Basic Economic Concepts

Section 3: Economic Choices and Decision Making

Section 3: Economic Choices and Decision Making (cont.)

Section 3: Economic Choices and Decision Making (cont.)

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Identifying Key Terms

capital goods consumer goods consumers factors of production utility

human capital opportunity cost scarcity services value

Identifying Key Terms (cont.)