What is Economics?: Scarcity and factors in production

OBJECTIVES: Chapter 1:1

o WHAT: Explain that scarcity and choice are the basis of economics.

o WHAT: Describe what entrepreneurs do.

o WHAT: Define the three factors of production and the differences between physical and human capital.

o WHAT: Explain how scarcity affects the factors of production.

o WHY: 12 1 (1). Examine the causal relationship between scarcity and the need for choices.

• “Therefore take no thought, saying, What shall we eat? or, What shall we drink? or, Wherewithal shall we be clothed? (For after all these things do the Gentiles seek:) for your heavenly Father knoweth that ye have need of all these things. But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you.” Matthew 6:31-33.

• How do you spend your money?

• What do you spend most of your money on? (list 3)

• What is something you are willing to save more for and why?

• What are some things you believe you spend money on that you believe that you should stop buying?

• Economics is the study of how individuals, businesses, and governments make choices when faced with a limited supply of resources.

Scarcity and Choice • The study of economic begins

with the fact that people cannot have everything they need and want.

• A Need is something essential for survival such as food or medical care.

• But my God shall supply all your need according to his riches in glory by Christ Jesus. Philippians 4:19

Discussion Question

• What are five essential needs that are necessary and explain why?

• He who has given his life to God in ministry to His children is linked with Him who has all the resources of the universe at His command. His life is bound up by the golden chain of the immutable promises with the life of God. The Lord will not fail him in the hour of suffering and need. "My God shall supply all your need according to His riches in glory by Christ Jesus." Philippians 4:19. And in the hour of final need the merciful shall find refuge in the mercy of the compassionate Saviour and shall be received into everlasting habitations. {MB 24.1}

• Perhaps it appears that obedience to some plain requirement of God will cut off his means of support. Satan would make him believe that he must sacrifice his conscientious convictions. But the only thing in our world upon which we can rely is the word of God. "Seek ye first the kingdom of God, and His righteousness; and all these things shall be added unto you." Matthew 6:33. Even in this life it is not for our good to depart from the will of our Father in heaven. When we learn the power of His word, we shall not follow the suggestions of Satan in order to obtain food or to save our lives. Our only questions will be, What is God's command? and what His promise? Knowing these, we shall obey the one, and trust the other. {DA 121.2}

Scarcity and Choice • Want: Is something

that we desire but that is not necessary for survival.

Discussion Question

• What are five wants that people crave that are not necessary.

Scarcity and Choice • And the LORD God commanded

the man, saying, Of every tree of the garden thou mayest freely eat: But of the tree of the knowledge of good and evil, thou shalt not eat of it: for in the day that thou eatest thereof thou shalt surely die. Genesis 2:16-17

Scarcity and Choice • And when the woman saw that

the tree was good for food, and that it was pleasant to the eyes, and a tree to be desired to make one wise, she took of the fruit thereof, and did eat, and gave also unto her husband with her; and he did eat. Genesis 3:6.

ACTIVITY

• Determine from the visual aids in the board what are needs and what are wants in your life.

Scarcity and Choice • People satisfy their needs and

wants with goods and services.

• Goods: are physical objects that someone produces such as food, clothing, or video games.

• Services: Are actions or activities that one person performs for another such as Medical care and haircuts.

The Problems of Limits: • People’s needs and wants are unlimited. • When one want is satisfied, others arise. • Goods and services are limited. • No one can have an endless supply of anything. • Sooner or later a limit is always reached. • The fact that limited amounts of goods and

services are available to meet unlimited wants is scarcity.

• Economics is the study of how people seek to satisfy their needs and wants by making choices.

• (1Co 9:25) And every man that striveth for the mastery is temperate in all things. Now they do it to obtain a corruptible crown; but we an incorruptible.

–“How (and Why) Athletes Go Broke,” Sports Illustrated, 2009

“By the time they have been retired for two years,

78% of former NFL players have gone bankrupt or

are under financial stress because of joblessness or

divorce.”

“Within five years of retirement, an estimated 60% of

former NBA players are broke.”

Discussion Question

• Give three examples of products or resources that are scarce and explain why they are scarce.

Scarcity verses Shortage • A shortage occurs when consumers

want more of a good or service than producers are willing to make available at a particular price.

• Unlike shortages, scarcity always exists.

• There simply are not enough goods and services to supply all of society’s needs and wants.

Entrepreneurs and the Factors of Production

• How scarce resources turned into goods and services? Entrepreneurs play a key role.

• Entrepreneurs are people who decide how to combine resources to create new goods and services.

• To make a profit, entrepreneurs are willing to take risks.

• They develop new ideas, start businesses, create industries, and fuel growth.


• The first task facing an entrepreneur is to assemble factors of production, or resources used to make all goods and services.

• The three main factors of production are:

• Land: is referred to all natural resources used to produce goods and services.


• Natural resources are any materials found in nature that people use to make things or to provide services.

• Labor. Is the effort people devote to tasks for which they are paid.

• Capital: Refers to any human-made resource that is used to produce other goods and services.

• There are two types of capital: physical and human.

Discussion Question

• Who is an entrepreneur you have seen recently that has impacted the economy and explain why he or she is significant

Physical capital:

o Is human made objects used to create other goods and services are physical capital.

o Buildings, tools, and equipment.

Human Capital:

o The knowledge and skills a worker gains through education and experience.

o An economy requires both physical and human capital to produce goods and services.

• (Pro 13:4) The soul of the sluggard desireth, and hath nothing: but the soul of the diligent shall be made fat.

• Every man, woman, and child should be educated

to practical, useful work. All should learn some trade. It may be tentmaking, it may be some other business, but all should be trained to use their powers to some purpose. And God is ready to increase the capabilities of all who will educate themselves to industrious habits. We are to be "not slothful in business; fervent in spirit; serving the Lord." God will bless all who will guard their influence in this respect. --R. & H., March 13, 1900.

Benefits of Capital:

• Capital is a key factor of production because people and companies can use it to save a great deal of time and money.

• Physical capital such as machines and tools help workers produce goods and services more easily and at less cost.

• Human capital such as technical knowledge has the same result.

Scarce Resources: • All goods and services are

scarce because the resources used to produce them are scarce.

• For example: There are limited amount of Thai and Korean restaurants because there is only a limited number of people that can cook that kind of food.

POP QUIZ!!!!!!!!!!

B – Services A – Goods

C – Capital D – All of the above


C – Entrepreneur D – All of the above


C – Physical Capital D – Human Capital

B – More knowledge A – Extra Time

C – More productivity D – All of the above

• If a family invests $400 on some physical capital-a

washer and dryer. What is the benefit of using this type of capital?

Opportunity Costs


o WHAT: Explain trade offs.

o WHAT: Explain and understand opportunity costs.

o WHAT: Explain what it means to think on the margin.

o WHY: 11.2) Explain opportunity cost and marginal benefit and marginal cost.

o WHY: (6) Students conduct cost-benefit analyses and apply basic economic indicators to analyze the aggregate economic behavior of the U. S. economy.

• (Mar 10:21) Then Jesus beholding him loved him, and said unto him, One thing thou lackest: go thy way, sell whatsoever thou hast, and give to the poor, and thou shalt have treasure in heaven: and come, take up the cross, and follow me.

• Every time we chose to do something, we give up the opportunity to do something else.

• Tradeoffs: Is the act of giving up one benefit in order to gain another, greater benefit.

• Trade offs may involve values that can be measured by money, property, or time or enjoyment or satisfaction.

• You only have 24 hours in a day. How would you spend that time?

Studying the Bible? • Many of the youth say, "I have no

time to study my lesson." But what are they doing? Some are crowding in every moment to earn a few cents more, when this time pressed into work, if given to the study of the Bible would, if they practiced its lessons, save them more than the amount gained by overwork. It would save much that is expended in needless ornaments, and preserve vigor of mind to understand the mystery of godliness. "The fear of the Lord is the beginning of wisdom." {MYP 290.1}

Watching Korean Drama Marathon?

• Going to the gym?

• Studying?

• Hanging out with Friends?

• Church?

• What do you prioritize?

How Do We Use Our Time?

• Only let the moments be treasured. A few moments here and a few there, that might be frittered away in aimless talk; the morning hours so often wasted in bed; the time spent in traveling on trams or railway cars, or waiting at the station; the moments of waiting for meals, waiting for those who are tardy in keeping an appointment--if a book were kept at hand, and these fragments of time were improved in study, reading, or careful thought, what might not be accomplished. A resolute purpose, persistent industry, and careful economy of time, will enable men to acquire knowledge and mental discipline which will qualify them for almost any position of influence and usefulness. {COL 343.4}

• Businesses and governments have trade offs.

• They have to decide and weigh how to best use their time and resources.

Business and Tradeoffs: • Decisions that business

make on how to use their resources.

• land, capital, and labor also involve trade offs.

• Apple must determine how many Ipads it produces as oppose to Iphones.

Government and Trade Offs: • National, state, and local governments

also make decisions that involve trade offs.

• Economists and politicians use the term “guns or butter” to describe one of the common choices facing governments.

• The choice between spending money on military or domestic needs.

• A country devoted to produce more military goods have fewer resources to consumer goods (North Korea).

Opportunity Costs • In most tradeoffs, one of the rejected

alternatives is more desirable than the rest.

• The most desirable alternative somebody gives up as the result of a decision is the opportunity cost.

• For example: Get up early to work out, or sleep in.

• The opportunity cost of enjoying sleeping is to exercise to maintain health.

Thinking at the Margin: • Many decisions involve adding

or subtracting one unit, such as one hour or one dollar.

• When you decide how much more or less to do, you are thinking at the margin.

• The process of deciding whether to do or use one additional unit of some resource.

Marginal Cost/Benefit: • Marginal Cost: The extra cost

of adding one unit.

• Marginal benefit: The extra benefit of adding one unit.

Cost Benefit Analysis: • Decision makers have to compare the

opportunity costs and the benefits that they will sacrifice and what they will gain by a specific action.

• To make rational or sensible decisions at the margin, you must weigh marginal costs against marginal benefits.

• The marginal cost is the extra cost of adding one unit, whether it be sleeping an extra hour or building one extra house.

• The Marginal benefit is the extra benefit or adding the same unit.

• As long as the marginal benefits exceed the marginal costs, it pays to add more units.

TEAM DISCUSSION

What is the cost and what is the benefit of going to college?

• “For what is a man profited, if he shall gain the whole world, and lose his own soul? or what shall a man give in exchange for his soul?” Matthew 16:26.

• These poor souls are engaged in a wild chase after worldly pleasure and earthly riches. They have no knowledge of anything more desirable. But games, theaters, horse races, will not satisfy the soul. Human beings were not created to be satisfied in this way, to spend their money for that which is not bread. Show them how infinitely superior to the fleeting joys and pleasures of the world is the imperishable glory of heaven. Seek to convince them of the freedom and hope and rest and peace there is in the gospel. "Whosoever drinketh of the water that I shall give him shall never thirst," Christ declared.--Manuscript 12, 1901.

Create a skit:

Create a skit demonstrating opportunity costs.


o WHAT: Explain how production possibilities curves show efficiency, growth, and cost.

o WHAT: Explain why a country’s production possibilities depend on its resources and technology.

o WHY: 12 1 (1). Examine the causal relationship between scarcity and the need for choices.

Chapter 1:3

Luk_14:28 For which of you,

intending to build a tower, sitteth

not down first, and counteth the

cost, whether he have sufficient to

finish it?

Production Possibility Curve:

• A production possibility curve is a graph that shows alternative ways to use an economy’s productive resources.

• Production Possibilities Frontier is a line on a production possibilities curve that shows the maximum possible output an economy can produce.

Efficiency, Growth, and Cost:

• Efficiency is the use of resources in such a way as to maximize the output of goods and services.

• Underutilization: or the use of fewer resources than the economy is capable of using.

Growth:

• When an economy

grows, economists say

that the production

possibilities curve has

“Shifted to the right.”

Cost: • Economists explain these

increasingly expensive tradeoffs, through the law of increasing costs.

• This principle states that as production shifts for making one item to another, more and more resources are necessary to increase production of the second item.

• Therefore the opportunity cost increases.

Technology:

• Both human and physical capital reflect a vital ingredient of economic growth.

• Technology is the process used to create goods and services.

• Technology is one of the factors that can increase a nations’ efficiency.

ACTIVITY

What principles have you learned so far in

this chapter that is seen in this video from

both the company and the customers?

Discussion Activity

What technology do you think should be

developed to make life more efficient?

Discussion Activity

• Gather into groups of four and discuss and

explain what technologies need to be

updated or upgraded and explain the

reasons why you chose what needs to be

updated.

POP QUIZ!!!!!!!!!!

• Describe a real life situation

where scarcity impacts

choices.

STANDARD: (CA 11.2)

• Explain what Entrepreneurs do.

Standard: CA-(6)

• Explain what motivates

entrepreneurs to take risks.

CA-STANDARD: 12.2 (8)

• Explain what entrepreneurs

develop.

CA-STANDARD: 12.2 (8)

• Identify and explain opportunity

costs that you are faced with in

your life.

• CA 11.2

• Explain marginal benefit and

marginal cost.

• CA 11.2

Choose ONE of the following scenarios of applying cost/benefit

analysis.

a) The Los Angeles Lakers offering Anthony Davis a maximum

contact.

b) The Los Angeles Dodgers renovating and upgrading Dodger

Stadium.

c) Going to college or going to community college.

d) Going to a private school or going to public school.

CA-STANDARD (6)

What is Economics?: Scarcity and factors in production · 2020. 9. 3. · Scarcity and Choice •...

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