J.R.R. TolkeinLord of the Rings

• “All we have to do is decide what to do with the time we are given.” Gandalf

• Pretty good definition

of economics too!

An Economic System…

• Organizes its resources to distribute goods and services to its citizens

• What are the economic resources?

Factors of Production

• C

• E

• L

• L

apital

ntrepreneurship

and

abor

Entrepreneurship

• Creative, risk-taking use of the factors of productions in order to…MAKE A PROFIT

Dave Thomas

Henry Ford

G.W. Carver

Sam Walton

Mattress Mac

Other Entrepreneurs

• Bette Nesmith Graham

• Famous son

Mistake out

Michael Nesmith / Monkees

Factors of Productioncategory = land, labor, capital good,entrepreneur, consumer good

• Resource• Pine tree• Teacher• Telephone• Chain saw• Lawn mower• Receptionist• Natural gas• Drayton McClane• Crude oil• farmer

• Category• Land • Labor• Capital & Consumer• Capital & Consumer• Capital & Consumer• Labor• Land• Labor and Entrepreneur• Land• Labor and Entrepreneur

Identify the trade-off and opportunity cost in the following.

• A nation can make either pizzas or robots. They pick pizzas. Trade-off?

• Robots • Opportunity Cost?• The value of the robots• Going to school versus a full-time job. Trade-

off?• Job. Opportunity cost?• The salary you aren’t going to receive

• Car companies retool to make more hybrids than SUVs.

• Trade-off? The SUVs. Opportunity Cost?• Loss of sales from the SUVs• Going to the movies or going to see grandma.

You pick the movies.• Trade-off?• Granny. Opportunity Cost?• The value of the time spent with grandma.

• To cheat on a test or to be honest. Pick—cheat. Trade-off?

• Honesty,integrity, reputation

• Opportunity cost?

• The value you attach to those things