Economics is…THE STUDY OF HOW HUMANS

MAKE DECISIONS ABOUT

RESOURCES THAT HAVE

ALTERNATIVE USES.

RESOURCES INCLUDE CAPITAL

(WEALTH USED TO INVEST IN

BUSINESS), LAND, RAW

MATERIALS, AND LABOR.

What do you know about

economics?

How do economics

work in your personal life?

Provide one example to support your ideas.

How do economics

work in American national life?

Provide one example to support your ideas.

How does economics

work internationally?

Provide one example to support your ideas.

-Factual Question: What are the

characteristics of all economic

systems?

-Conceptual Question: What is the greatest good for society? (Stroll/Think/

Pair/Share)

Debatable Question: What economic system provides the greatest good for the greatest number?

Scarcity

All economic systems

must deal with scarcity

Scarcity is when…..

Human wants and needs are

unlimited.

Resources are limited…………

So, people must make choices,

as seen in the next four

questions.

http://www.seeing-stars.com/OC/Julie&CalebMansion(400).jpg

Scarcity

All economic systems

must deal with scarcity

Scarcity is when…..

Human wants and needs are

unlimited.

Resources are limited…………

So, people must make choices,

as seen in the next four

questions.

https://medium.com/theglobalvoice/the-singer-solution-to-world-poverty-9deb1b4c810

Question #1:

What will be

produced?

http://regmedia.co.uk/2007/12/12/787_production_line.jpg

Question #2:

How will it

be

produced?

http://www.sonofthesouth.net/leefoundation/civil-war/1862/november/salt-factory.jpg

Question #3:

For whom

will it be

produced?

http://www.ou-kosher.net/images/elements/homepage_consumer_1.jpg

WHO DECIDES HOW TO

ANSWER QUESTIONS 1-3? WHO

OR WHAT DO YOU THINK

SHOULD?

THE INVISIBLE HAND,

ENTREPRENEURS, WORKERS,

CONSUMERS, THE

GOVERNMENT, SOCIETY,

OTHERS?

How to make economic

choices:

Incentive:

a benefit that encourage people to act in certain ways.

http://www.areadevelopment.com/taxesIncentives/Feb09/incentives-negotiation-stateBudgets-closingFunds001.shtml

How to make economic

choices:

Economize:

The best combination of costs and benefits.

http://divisionoflabour.com/archives/2007_11.php

How to make economic

Choices:

Opportunity

Cost:

what it costs

to pursue one

thing over

another…

Before the Enlightenment…

People believed in

mercantilism:

there was a limited

amount of wealth in the

world

nations should control

trade with laws and

colonies to make sure

they most of the world’s

wealth

http://www.feedyourbottomline.com/pics/costs/pie.jpg

Supply and Demand

Supply:

Goods or

services

businesses or

governments

produce.

Demand:

What

consumers or

citizens

desire.

Means of Production

The means of

production

are the

resources

needed to

produce

goods and

services…..

raw materials,

tools, labor,

capital

wealth, etc.

http://www.csa.com/discoveryguides/envecon/images/land.jpg

Introduction to Trade in

Period 4:

Slavery: Identify economic

terms in the video as you

watch.HTTPS://WWW.YOUTUBE.COM/WATCH?V=3NXC4Q_4

JVG

Adam Smith

Capitalism has been around for some time, but it was “scientifically” explained by Adam Smith in The Wealth of Nations written in 1776.

Smith talked about the invisible hand of the market that actually creates wealth.

http://adamsmithfans.com/files/2008/12/adam_smith3.jpg

As Adam Smith says, “It is not from the

benevolence of the butcher, the brewer, or the

baker, that we expect our dinner, but from their

regard of their own interest. We address

ourselves not to their humanity, but to their

self-love, and never talk to them of our own

necessities, but of their advantage.”

( Reilly 194)

Pair and Share: How does this show the

workings of the invisible hand? Think critically.

The Invisible Hand

“The (entrepreneur)…neither intends to promote the public interest, nor knows how much he is promoting it…He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he is intending only his own gain, and he is in this…led by an invisible hand to promote an end which was no part of his intention….by pursuing his own interest he frequently promotes that of the society…” (Reilly 200)

Pair and Share: How does this show the workings of the invisible hand? Think critically.

The Invisible Hand:

The Price System

Izzit video

(5:00).

The Invisible Hand

The “market”

will provide

what society

needs

because of the

“self-interest”

(greed?) of

entrepreneurs

and

consumers.

http://romeconomics.com/wp-content/uploads/2013/01/Invisible-

Hand.jpg

Capitalism/The Free MarketLAISSEZ FAIRE CAPITALISM of the late19th/early 20th centuries:

the means of production are privately owned by business-people (entrepreneurs).

You need “natural laws” like supply and demand, freedom, and competition.

These incentivize innovation: to try new ideas or develop new products or services.

Supply and Demand is what gives products their value.

You need very little involvement of the government.

This is also called a free market.

http://rozdoum.com/blog_articles/items/ideal-client.html

Efficiency

Capitalism should be

efficient….how can the

product or service be

produced or offered most

efficiently?

This is to maximize profit.

How would you

organize the

boarding of an

airplane?HTTP://WWW.VOX.COM/2014/4/25/5647696/THE-

WAY-WE-BOARD-AIRPLANES-MAKES-

ABSOLUTELY-NO-SENSE

Natural Laws

Supply and Demand: The less of something and/or the

more people want it, the more valuable it is.

Freedom: People must be able to make choices.

Competition: Businesses must be free to enter and leave

the market for the market to work.

And, of course, scarcity.

Sourcing: APPARTS

Adam Smith: an excerpt from

“The Wealth of Nation” 1776

Fenton: pages 194-5

Identify: Author, Audience,

Main Idea, and Significance

Go into your notes/text and identify

one example of each of the following:

-Scarcity

-Economizing

-Incentives

-Opportunity Costs

-Mercantilism

-Means of Production

-Natural Laws:

-Competition

-Supply and Demand

-Freedom

-Capitalism’s “the Invisible Hand”.

Have students create

business plans…See

project instructions.

Show: Pennies a

Day

HOW CAPITALISM MAY BE ENDING POVERTY IN

OUR WORLD TODAY.

AS YOU WATCH THE FILM, LIST EXAMPLES OF

SCARCITY, SUPPLY AND DEMAND, COMPETITION,

FREEDOM, AND PROFIT.

Transition….

Capitalism: Focus on individual freedom and

scientific efficiency

Socialism and Communism: Focus on the masses

and equality

Socialism Socialism favors public

(government) ownership

over private ownership of

the means of production.

Society, not individuals,

should control the nation’s wealth.

Wealth should be more

equally distributed.

You can have elements of

a socialist economic

system and a democratic

political system.

http://www.marxists.org/history/usa/eam/spa/~SPA-SPAGLOBELOGO.gif

Communism/Marxism: At Least

in Theory

Karl Marx and

Frederick Engels

developed

communism in

1848 as workers’

lives changed in

the industrial

revolution.

http://www.york.ac.uk/depts/poli/images/Karl_Marx.jpg

Socialist Theory

Our labor is what makes us human. What we do makes us who we are.

Our labor is what give products their value.

https://pixabay.com/en/work-workers-men-face-silhouette-384745/

Capitalism, according to Marxists, would, by

its nature, lead to a communist revolution.

Laissez-faire or industrial

capitalism, according

to communism, exploits

(takes advantage of) workers.

The workers (proletariat)

will become educated

about this and start a

revolution against the

capitalists (bourgeoisie).

http://www.enargywebzine.eu/local/cache-vignettes/L250xH211/arton282-

16ce3.jpg

The Utopian Communist State

In theory…..

Ownership of the means of production would first be with the state and then with the workers in a democracy.

Classes would disappear. People would be less materialistic.

In reality…

All communist societies up to this point have been dictatorships.

http://filebox.vt.edu/users/efalwell/posters/1.jpg

Another transition…..MODIFIED CAPITALISM….LAISSEZ FAIRE WILL

CHANGE.

Modified Capitalism

The Federal Government (Fed) and local governments regulate aspects of the economy.

The Fed can use taxes and spending to influence the economy (Fiscal Policy).

The Fed can lower or raise interest rates to influence the economy (Monetary Policy).