Unit I – Scarcity & Choices

Provide an example of a good.

Provide an example of a

service.

Explain the difference

between a good and a service.

• Good–Physical objects–Objects that are tangible

• Service–Actions or activities that one person

performs for another

List the 3 Factors of Production.

• Land• Labor• Capital –Physical Capital–Human Capital

Understand the differences between the 3 Factors.

Land

• Natural resources that are used to make goods and services

Labor• The effort that people devote to a

task for which they are paid

Capital• Any human-made resource that is

used to create other goods and services

Understand the difference between physical and human capital.

• Physical Capital–Machines, tools, and buildings that are used

to produce other goods and services

• Human Capital– Skills and knowledge gained by a worker

through education and experience

• “Human capital is as much a part of the wealth of nations as factories, machinery, and other physical capital.”

Economist - Gary Becker

Support your opinion on which is more important

to a nation’s economy, physical or

human capital.

Explain how a business would

use the 3 Factors of

Production to make a product.

Identify and explain the importance of at least 3 personal characteristics common to

successful entrepreneurs.

Evaluate the importance of entrepreneurs in our society.

Discuss the “Economizing Problem” that

causes scarcity.

• “We have UNLIMITED WANTS, but LIMITED RESOURCES.”• This causes the scarcity of

everything.

Explain situations in your life that

involved opportunity costs

and be able to identify and explain why they are your opportunity costs.

• Opportunity Cost–The most desirable alternative given

up when a making a decision.

Explain the economic reasoning behind a making a choice.

• Whenever people decide whether the benefits of a particular action are likely to outweigh its costs, they engage in a form of benefit-cost analysis....• Benefit > Cost–Do It!!!

• Benefit < Cost–Don’t Do It!!!

Explain what an incentive is.

• A reason for doing something• 3 types from Freakonomics

•Moral–one acts out of conscience or

conviction•Social–actions are related to shame

•Economic–people act in their financial interest.

Provide examples of

how incentives affect people’s

decisions.

Construct a correctly

labeled a PPC curve.

Cons

umer

Goo

ds

Capital Goods

Illustrate where a society is operating

efficiently in regards to the

PPC curve.

Cons

umer

Goo

ds

Capital Goods

A B

C

D

Illustrate where a society is

underutilizing its resources in regards to the

PPC curve.

Cons

umer

Goo

ds

Capital Goods

X

Illustrate where a society is

operating at an unsustainable

level in the short run in regards to the PPC curve.

Cons

umer

Goo

ds

Capital Goods

U

Identify 3 reasons why a PPC curve may

shift.

• Change in Quantity of Resources Available– Increase in Quantity; Curve shifts to the Right

• Change in Quality of Resources Available– Increase in Quality; Curve shifts to the Right

• Change in Technology– Increase in Technology; Curve shifts to the Right

Cons

umer

Goo

ds

Capital Goods

A B

C

D

U

X