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KY Charge Economics WorkshopFederal Reserve Bank of St. Louis - Louisville BranchDavid Perkis, Ph.D.

Federal Reserve Bank of Cleveland - Cincinnati BranchAlexandria Halmbacher

Eastern Kentucky University Center for Economic EducationCynthia Harter, Ph.D.Heather Ransom (KDE)

The views expressed in the presentation are mine and not the views of the Federal Reserve Bank of St. Louis or the Federal Reserve System.

Basic EconomicsDavid Perkis

Missing Chairs

- Pretend that when you entered the room this morning, there were only enough chairs for half of you?

- How do we decide who gets a chair? - Break up into groups of 3 to 4 people and come

up with some systems for how chairs could be distributed.

Chair Distribution Schemes

Inquiry Questions+ What choices were you faced with? Go into detail about

how your choices impact specific students or groups of students.

+ How did scarcity play a role in those choices?

+ Were the chairs more or less valuable knowing they were scarce?

Economics: Incentives, Choices, and Decision Making

+ Scarcity: we have unlimited wants and limited resources.

+ Economics: the study of how scarce resources are distributed amongst society.

+ Distribution schemes are often based on the choices we make in the face of incentives.

Inquiry: More Questions+ Pick 2 possible chair distribution schemes. What

are the trade-offs between these two schemes?

+ An Opportunity cost is the next best alternative given up when making a choice. Pick one choice for how to distribute chairs. What is (are) the opportunity cost(s) of that choice?

Specialization, Trade, and Interdependence

+ Segway from opportunity cost and trade into specialization.

+ “Is there something you would trade to avoid the opportunity cost of not having a chair?”

+ “What can you specialize in producing that others would give up their chair for?”

Microeconomics and Markets+ For discussion and

communication: “Why have we chosen markets and prices to allocate goods?”

+ Have other allocation systems been used in earlier history?

Micro and Macro

+ Microeconomics: decisions of individual agents (firms, consumers, etc.) and individual markets

+ Macroeconomics: economic outcomes of geographical regions (cities, states, countries)

Micro vs. Macro

+ In 2017, Coca Cola had more revenue than the GDP of Bolivia.