IMPLEMENTATION PLAN:

1
Economics

• The word economy comes from a Greek word for one
  who manages a household.
• Economics is the study of how society manages its
  scarce resources.
• Resources Factors of Production
• land
• labor
• kapital
• entrepreneurship

2
Use Resources to Produce Goods Services


3
Use Resources to Produce Goods Services

• The management of societys resources is
  important because.
• Resources are SCARCE!
• Resources are LIMITED!
• Cant have everything we want, desire (need)!
• What to produce?
• How to produce it?
• Who gets it?

4
A Household / Economy Faces Many Decisions

• Who will work?
• What goods should be produced?
• What resources should be used in production?
• What prices should goods be sold for?
• Import/Export?
• Guns Butter?

5
A Household / Economy Faces Many Decisions

• How much health carewho should get it?
• How much educationwho should get it?
• How much militarywho should get it
• How much transportationwho should get it?
• How much green spacewho should get it?
• How much garbagewho should get it?
• How much carbonwho should get it?

6

• Choose Between Alternatives

• choices ? TRADE-OFFS ? forgone alternatives ?
• OPPORTUNITY COST
• go to college or to work?
• study or go out on a date?
• go to class or sleep in?
• mandate fleet average of 35 mpg for auto makers?
• mandate 15 of energy come from renewable
  sources?
• The OPPORTUNITY COST of an item is what you give
  up to obtain that item.

7

• Choose Between Alternatives

8

• Choose Between Alternatives

9

• Choose Between Alternatives

10
There Is No Such Thing As A Free Lunch

• The Cost of Something is What is Given Up
• free ticket to a Dave Matthews concert?
• getting bumped from a flight
• snow removal equipment?
• universal health coverage?
• the war on terror?
• Kyoto, Copenhagen, Cancun, Rio, Doha?
• if not here..then where?
• Choosing is Refusing!

11
Thinking On The Margin

• incremental/minor adjustments
• stay open another hour?
• study one more hour for economics exam?
• eat one more slice of pizza?
• additional schooling?
• save the rainforest (whales, baby seals, owls)?
• cars, roads, alternative fuels, public
  transportation?
• Canadian tar sands, Frac(k)ing?
• DRILL BABY DRILL?
• Choosing is Refusing!

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Thinking On The Margin
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There is no such thing as a FREE LUNCH

• Quote by Thomas Sowell..

What is YOUR solution? There are no
solutions, I said. There are only
trade-offs. The people DEMAND solutions! she
shot back angrily. I replied, the people can
demand square circles if they want. But that
doesn't mean that they will get them.
14
Markets Choices/Rationing
Back to Scarcity Whats the Question? And what
does opportunity cost have to do with it?
Should we ration?
Given that we MUST ration, what is the best
mechanism? Scarcity forces us to choose CHOOSING
is REFUSING!
15
Markets Choices/Rationing

• Methods of Allocation
• random (lottery)
• age, beauty, height, skin color
• first come first serve
• share equally
• auction
• prices (willingness to pay)
• Markets!
• Interaction and Trade (exchange)