lawn boy : an initiation to the beauties and mysteries of capitalism
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LAWN BOY : AN INITIATION TO THE BEAUTIES AND MYSTERIES OF CAPITALISM. OBJECTIVES. The student will understand the fundamentals of the market system. The student will understand the definition of Economics. - PowerPoint PPT PresentationTRANSCRIPT
LAWN BOY: AN INITIATION TO THE BEAUTIES AND MYSTERIES OF CAPITALISM
The student will understand the fundamentals of the market system.
The student will understand the definition of Economics.
The student will understand why people have to make choices and that with choosing comes consequences.
The student will understand that with every benefit there is always a cost.
OBJECTIVES
EconomicsScarcityMarket EconomyOpportunity CostEntrepreneurshipIncentives
CONCEPTSSupplyDemand PriceBenefitsCostsUtilityLabor
Standard 1 : ScarcityProductive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others.
Standard 2 : Marginal Cost/BenefitEffective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are "all or nothing" decisions.
NATIONAL STANDARDS
Standard 3 : Allocation of Goods and Services
Different methods can be used to allocate goods and services. People acting individually or collectively through government, must choose which methods to use to allocate different kinds of goods and services.
Standard 4 : Role of IncentivesPeople respond predictably to positive and negative incentives
NATIONAL STANDARDS
WHICH ONE OF THESE TWO THINGS WOULD YOU RATHER BE
DOING RIGHT NOW?
A Cost is something you give up in making a choice
A Benefit is something you gain.
What would be the costs and the benefits of doing this now?
COSTS AND BENEFITS
COSTS AND BENEFITS
WHY MUST YOU CHOOSE? BECAUSE OF SCARCITY
Why have you chosen to do this instead? What are the costs and benefits?
SCARCITY TELLS ME ICAN’T DO BOTH, IHAVE TO MAKE A CHOICE.SINCE YOU CAN’T HAVEEVERYTHING YOU WANTECONOMICS HELPS USGET THE MOST OUT OF WHAT WE CAN HAVE.
SCARCITY
Have you ever heard the phrase:“There is no such thing as a free lunch”?
T.I.N.S.T.A.A.F.L.
EVEN THOUGHTHE SIGN SAYSSO, IS IT TRULYFREE? I MAY NOTGIVE UP MONEY,BUT WHAT AM IGIVING UP BYATTENDING?
OPPORTUNITY COST
IF I EAT LUNCH FROM 12:00 TO 1:00 P.M., WHAT CAN’T I DO?
What is the Opportunity Cost of the following choice?
Buying a gift for a friend. Working at a job after school. Waiting on line for an hour to buy a new cell
phone. Playing on your X-Box for two hours after
dinner.
Did you all have the same answers? Why not?
OPPORTUNITY COST IS THE BEST OPTION GIVEN UP WHEN YOU MAKE A
CHOICE
Economics is the study of how people make choices. When you make a good economic decision the benefits will be greater than the costs.
WHAT IS ECONOMICS?
UTILITY = SATISFACTION
He made a good decision He made a bad decision
INCENTIVES are things such as rewards that
motivate a person to do something.
Punishment is meant to be a disincentive.
PEOPLE RESPOND TO INCENTIVES
WHY DO PEOPLE MAKE THE DECISION TO GO INTO BUSINESS FOR THEMSELVES?WHAT ARE THE INCENTIVES?
TAKE OUT A PIECE OF PAPER AND DRAW A LINE VERTICALLY DOWN THE MIDDLE. LABEL ONE SIDE
BENEFITS AND THE OTHER SIDE COSTS. WHAT WOULD BE THE BENEFITS OF OPENING YOUR OWN BUSINESS
AND WHAT WOULD BE THE COSTS?
BENEFITS COSTS
PROFIT BE YOUR OWN BOSS FREEDOM FILL A NEED HAVE MORE CONTROL
OVER MY WORK SCHEDULE
PAID MORE FOR MY WORK
GREAT CHANCE OF FAILURE
NO ONE TO SHARE THE COSTS WITH
NO ONE TO SHARE RESPONSIBILITIES OR SKILLS
DO THE JOB OF THE WORKER AND THE BOSS
THERE WAS A TIME WHEN THE MAJORITY OF ADULT AMERICANS SMOKED AND PEOPLE
THOUGHT IT LOOKED COOL.
INCENTIVES HELP PEOPLE MAKE CHOICES
NOW LESS THAN 25% OF THE U.S.
POPULATION SMOKES AND THE NUMBERS HAVE BEEN SHRINKING FOR DECADES.
WHAT CHANGED?
WE GOT EDUCATED
CHANGING INCENTIVES CHANGE PEOPLE’S CHOICES
SCARCITY TELLS US WE CAN’T HAVE EVERYTHING WE WANT
EVERY DAY OF OUR LIVES WE HAVE TO MAKE CHOICES
IN MAKING CHOICES WE WEIGH THE BENEFITS AGAINST THE COSTS
NOTHING IS FREE, THERE IS ALWAYS AN OPPORTUNITY COST
A GOOD ECONOMIC DECISION CREATES MORE BENEFITS THAN COSTS
INCENTIVES HELP US TO CHOOSE
SO, TO RECAP!!!
When the word MARKET is
said, what are some examples or images that come to mind?
FLEA MARKET STOCK MARKET FARMERS’ MARKET GROCERY STORE BOSTON MARKET WAL-MART HOUSING MARKET JOB MARKET
WHAT IS A MARKET?
What are some characteristics that all of these examples have
in common?
Buyers arrive with money looking to purchase things.
Sellers offer goods or services in exchange for money.
WHAT IS A MARKET?
Buyers won’t be satisfied if they value the money in their pockets more that the items for sale.
Sellers won’t be satisfied if they value the items for sale more than the buyers are willing to pay.
Both buyers and sellers have an incentive to reach a compromise price in order to be mutually satisfied.
COMMON MARKET CHARACTERISTICS
THE WORLD’S ECONOMIES
PROVIDE US WITH A LOT OF CHOICES AND THE WORLD’S SHOPPERS HAVE A LOT OF DIFFERENT
INTERESTS.
THE MARKET ECONOMY
IN AMERICA, WE HAVE A LOT OF FREEDOM TO DECIDE WHAT WE WANT TO DO WITH OUR LIVES AND HOW WE WANT TO SPEND OUR MONEY
THE MARKET ECONOMY
THE MARKET ECONOMY ALLOWS SELLERS TO COMPETE FOR CONSUMER DOLLARS
SUPPLY DEMAND
PRICE OF LABOR
WHY DOES THIS GUY MAKE $30,000,000?
WHY DOES THIS GUY MAKE $7.25?
WE LOVE BASKETBALL, ESPECIALLY HIGH FLYING AND ACROBATIC DEFYERS OF GRAVITY ( HUGE DEMAND)
THERE’S ONLY ONE LeBRON (TINY SUPPLY) WE LOVE FAST-FOOD THOUGH WE KNOW IT’S
NOT GOOD FOR US (HUGE DEMAND) THERE ARE SEEMINGLY ENDLESS CHOICES FOR
IT AND THE PROCESS OF MAKING IT DOESN’T REQUIRE UNIQUE SKILLS. JUST ABOUT ANYONE CAN FILL THE JOB. ( EVEN BIGGER SUPPLY)
THE ANSWER IS: SUPPLY AND DEMAND
It’s the Motorola DynaTAC 8000X , the world’s first cell phone. It went on sale March 6, 1983 and the initial price was $3995. It had enough battery life for 30 minutes of talk and there was a waiting list of thousands anxious to buy it.
DO YOU KNOW WHAT THIS IS?
Today we have cellular technology that allows for all kinds of communication, video streaming, and downloads with more computing power and memory then the technology that sent all of our astronauts to the Moon. Many are given away with service contracts.
HOW DID THAT HAPPEN?
IN 1983, ONE COMPANY MADE CELL PHONES WITH VERY EXPENSIVE PARTS AND A GREAT AMOUNT OF COSTLY LABOR (TINY SUPPLY)
PEOPLE WERE CRAZY ABOUT IT AND WAITED FOR MONTHS BEFORE DELIVERY (BIG DEMAND)
IN 2011, MANY COMPANIES MAKE A VARIETY OF PHONES WITH VERY INEXPENSIVE PARTS AND VERY LITTLE HUMAN LABOR INVOLVED (HUGE SUPPLY)
MOST CONSUMERS HAVE A PHONE AND SPEND MOST OF THEIR MONEY ON SERVICES (DEMAND IS SLOWING DOWN)
THE ANSWER IS: SUPPLY AND DEMAND
1. A TICKET TO SEE YOUR FAVORITE FOOTBALL TEAM NOW THAT THEY’VE MADE THE PLAYOFFS
2. A GALLON OF GASOLINE AFTER A HURRICANE SHUTS DOWN OIL DRILLING PLATFORMS IN THE GULF OF MEXICO.
3. A BUSHEL OF CORN AFTER FARMERS IN IOWA DISCOVER A MORE POWERFUL FERTILIZER.
4. A PAIR OF DESIGNER JEANS AFTER EVERYONE’S FAVORITE CELEBRITY IS SEEN WEARING THEM THE NIGHT BEFORE ON AN AWARDS SHOW.
5. A BIG MAC AFTER RESEARCHERS DETERMINE THAT EATING TOO MUCH FAST FOOD CAUSES STUDENTS TO GET LOWER GRADES.
READ EACH STATEMENT BELOW AND DECIDE WHETHER THE PRICE OF THE ITEM WILL GO UP OR DOWN. ALSO,
IS THIS BECAUSE OF A CHANGE IN SUPPLY OR DEMAND?
IN ORDER FOR THE MARKET TO WORK IT MUST BE OPEN TO EVERYONE
MARKETS ARE CREATED TO ALLOW BUYERS AND SELLERS TO PROFIT.
SELLERS MAKE MONEY AND BUYERS GET THE ITEMS THEY’RE LOOKING FOR.
THE PRICE HELPS BUYERS MAKE DECISIONS ON WHAT THEY WILL PURCHASE AND HELPS SELLERS DETERMINE WHAT THEY SHOULD PRODUCE.
WAGES ARE DETERMINED BY THE SUPPLY AND DEMAND FOR THE JOB SKILLS OFFERED.
SO, TO RECAP!!!
IS THE MARKET POWERLESS TO DO ANYTHING ABOUT THE PRICE OF GASOLINE?
IS ANYTHING IN THIS WORLD TRULY PRICELESS?