Economics Mr. Webster’s Class. Introduction to Economics – Group Assignment For the next few minutes, I want you to pretend that you work in advertising,

EconomicsMr. Webster’s Class

Introduction to Economics – Group Assignment• For the next few minutes, I want you to pretend that you

work in advertising, and that you have been hired by a leading fast food chain to help them sell their product. • What would you do to convince consumers that they

should buy your product?• On a sheet of paper, write down your sales pitch, and be

prepared to present it to the class. • The group that presents the most convincing sales pitch

wins a reward!

Extra Credit Opportunity (due 5/6)

• For this assignment, students must conduct research on a 20th-century, international conflict in which the United States participated. Students must write one paragraph that summarizes the causes and effects of the conflict, and they must also create or print out an illustration that complements their writing.• STUDENTS MUST USE A SOURCE AND CITE THAT SOURCE AS

WELL! PLAGIARISM WILL NOT BE TOLERATED, AND STUDENTS WHO PLAGIARIZE WILL RECEIVE A ZERO!• The assignment is worth 20 points. • I will be grading as follows:

• Paper (Accuracy & Relevance) – 10 points• Illustration (Relevance / Significance) – 10 points

Extra Credit Opportunity

• List of Possible Topics• World War I• World War II• Cold War• Korean War• Vietnam War• Iran Hostage Crisis• Gulf War• Afghanistan War• Iraq War

Economics Writing Assignment – worth 20 points• For this assignment, you are to write 2 paragraphs about

one of the following topics:

• Supply and demand• Types of resources• The three basic economic questions• The basic economic problem

• I will be giving 10 points for each paragraph for relevance and accuracy of content.

Budget Project (worth 50 points) – due 5/27• For this assignment, you are to refer to the worksheets

you have been provided to create a budget for yourself.• The project is worth 50 points, and students will receive

10 points for correctly completing each of the following: the general information worksheet, the cost worksheet, your grocery list with prices, your weekly menu, and a paragraph on what you learned from the project. • *Electronic copies of the worksheets are available

through the class website.*• The assignment is due Wednesday, 5/28.

Introduction to Economics

• Economics is the study of how people choose to use resources to fulfill their needs and wants.• Resources are the things that can be used to make products or services that people want.• Wants are desires that people have that can be met by getting a particular good or service.• Scarcity occurs when we do not have enough resources to produce all of the things we would like to have.

Goods and Services

• Wants fall into two groups: goods and services.• Goods include things that we can touch or hold (like an iphone). • Services include work that is done for us (like a haircut).

Types of Resources

• There are three types of resources.• Natural resources include a nation’s land and all of the materials that nature provides that can be used to make goods and services.• Labor includes workers and their abilities. The more workers a society has, the more it can produce.• Capital includes buildings, tools, and even money, which helps make work more productive.

Resources Collage

• For this assignment, you are to pick a particular good, and then create a collage that illustrates the types of resources that contribute to the finished product.• You must include all three types of resources: natural resources,

labor, and capital, and you must include an illustration of each, in an addition to an illustration of the finished product.• The assignment is worth 20 points, and I will be giving 5 points

for each of the following:• Finished Product• Natural Resources• Labor• Capital

Scarcity

• Scarcity is the basic economic problem. • Scarcity occurs whenever we do not have enough resources to produce all of the things we would like to have.• No country has all of the

resources it needs, or would like to have.

Three Basic Economic Questions

• Scarcity of resources forces societies to make economic choices. These choices must answer three basic economic questions.

1. What goods and services will be produced?

2. How will they be produced?

3. Who will consume, or use, them?

Economic Systems

• Each country has its own economic system, or way of producing the things people need and want.• The way that a society decides the

three basic economic questions determines the type of economic system the society has.• In a traditional economy, the economic questions are answered on the basis of habit or custom. These economies are not generally very productive.

Economic Systems

• In a market economy, individuals and businesses own the resources used to produce goods and services. They answer the three economic questions on the basis of profit and price.• In a command economy, planners who work for the government answer the economic questions and they decide what will be produced, how they will be produced, and how they will be made available.

The American Economy

• The United States is based on a market economy. In a market economy, businesses are free to compete for profit with little interference from the government.• The United States does not

have a pure market system, though, as the government does play a role in the economy.• Because our economy has some

elements of all three types of economies, the United States has a mixed market economy.

Costs and Revenues

• To understand how businesses make economic decisions, it is important to understand costs and revenues.• Simply put, costs are expenses.• Fixed costs are expenses that do not change no matter how much a business produces (i.e. rent).• Variable costs change depending on how much a business produces (i.e. labor).• Total costs equals fixed costs plus variable costs.• Revenue is the money a business receives from selling its goods or services.

Consumers and Producers

• In a market economy, prices are set by a kind of interaction between what is known as supply and demand. • Supply and demand results from

the desires of two groups: consumers and producers.• Consumers are the people who buy goods and services.• Producers are the people or businesses that provide goods and services.

Supply and Demand

• Supply is the amount of a good or service that producers are willing and able to sell at a range of prices.• Demand is the amount of a good or service that consumers are willing and able to buy at a range of prices.• Supply and demand are both often

represented as lines on a graph. • The point where the supply and demand curves meet is the equilibrium price.

Surpluses and Shortages

• A surplus is a situation that occurs when supply exceeds demand.• A shortage is a situation that occurs when demand exceeds supply.• Factors that affect

demand include the number of consumers and changes in consumer income.• Factors that affect supply

include the number of suppliers and the costs of production.

Review Questions and Answers – worth 20 points• You are to use your textbook (Chapter 17) to create 10

questions and answers that you feel would make good test questions.• You are to put all of your questions on one sheet of

paper, and all of your answers on another sheet of paper. On the answer sheet, you also need to write down the page # where you got your information.• Once you have completed creating your questions and

answers, you will submit them to me and I will distribute another student’s questions to you for you to answer. • The first three students to complete the assignment

successfully will receive a reward.

Create your own Business • For this assignment, you are to come up with an idea for a business and

create your own business plan.• You can customize your business to suit your own personal interests, but

your plan must include the following:• A mission statement that briefly states the main purposes and goals of your

company.• A one-paragraph summary that answers the 3 basic economic questions as it

applies to your company (what are you going to produce, how are you going to produce it, and who is going to buy it).

• An advertisement of sorts that will get prospective buyers interested in your company.

• Put your mission statement and summary on one sheet of paper, and your advertisement on another.• The assignment is worth 20 points. The summary is worth 10 points, and

the mission statement and advertisement are both worth 5 points each.

Capitalism and Free Enterprise• In the United States, citizens – not

the government – make most of the economic decisions. This kind of economic system is called capitalism.• In capitalism, private citizens own and decide how to use the factors of production in order to make money.• Our system is also called a free

enterprise economy.• In a free enterprise system, individuals and groups have the freedom to start businesses with little government interference.

Features of Free Enterprise

• There are six unique features of the free enterprise system. They are:1. Economic freedom2. Markets3. Voluntary exchanges4. Profit motive5. Competition6. Private property rights

The Origin of U.S. Capitalism

• Adam Smith is considered to be the father of modern economics. In 1776, Smith published a book titled The Wealth of Nations.• From the writings of Smith and

others came the idea of laissez-fair economics, which is a French term meaning “to let alone.”• Laissez-faire economics is the belief that government should not interfere in the marketplace.

Consumerism

• As a consumer, you have certain rights.• Consumerism is a movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers.• Responsible consumers gather

as much information as they can about what they want to buy before opening their wallets.

Be an Informed Consumer

• Advertising can help consumers learn about goods and services, although some ads use questionable techniques to convince consumers to buy certain products.• Once you know what product you

want, you must decide where to buy it.• It is important to compare a product’s price at different stores or companies. This is known as comparison shopping.

Avoid Impulse Buying

• Impulse buying is an unplanned, often emotional, decision to buy.• Impulse buying can ruin a budget.• You can control impulse spending

by:• Making a list of the things you need,

and only purchasing the items on that list.

• If you see a tempting item, think about whether you really need the item. The impulse may pass once you give the purchase more thought.

Keeping a Budget

• The best way to manage your money is to make a budget.• A budget is a careful record that tracks all the money you earn and spend.• A budget tells you exactly where

your money comes from and where it goes.• It can help you cut down on

impulse spending and save money for things you really want.

Budgeting Basics

• The three parts of a budget are income, expenses, and the balance.• Income is the money you earn, or receive.• An expense is the money you spend on goods and services.• The balance is the amount of money you have after you subtract your expenses from your income.• Your goal is to keep a positive balance.• If you have more expenses than income, you have a deficit.

Credit• Most people and businesses have to

borrow money at some time.• Credit is the key tool used for

borrowing money.• Credit gives buyers permission to buy something now while promising to pay for it later.• Perhaps the most common type of

credit in use today is the credit card.• Credit cards allow consumers to pay for goods and services using borrowed money, up to a present limit.

Credit Basics

• A lender is a person or institution that gives someone money temporarily and for a fee.• The fee charged for borrowing money is called interest.• The money lent at interest is called a loan. The recipient of the loan is called a borrower.• The annual percentage rate (APR) is the annual cost of credit expressed as a percentage of the amount borrowed.• A credit rating is an estimate of a borrower’s

ability to repay a loan. It is based on the borrower’s previous credit experiences.

Pros and Cons of Credit

• Used wisely, credit can be a valuable tool for consumers. It allows you to obtain something you want without waiting until you can save the entire purchase price.• However, credit also carries

serious dangers. Many people get into financial trouble by borrowing more than they are able to repay. Consumers who make only the minimum monthly payment soon find they have a perpetual debt.

Saving Money

• Saving money helps you reach long-term spending goals. • Opening a savings account at a bank or credit union is one way to save money. • Your savings earn interest, which

is added automatically to the principal (or amount of initial deposit).• Savings accounts are safe, but they pay less in interest than other investments.

Money Market Accounts and CDs

• Money market accounts are like savings accounts, but they usually pay a higher rate of interest.• Certificates of Deposit (CDs) is

another savings option. With a CD, you agree to deposit a sum of money with a financial institution for a certain amount of time. A CD almost always offers a higher rate of interest than a regular savings account.

Stocks

• A stock is an investment that tends to have a higher return over time.• Stock represents ownership of a company. When you buy stock, you become a part owner in a company.• Someone who owns stock is called a shareholder, or stockholder.• As a shareholder, when the

company does well, the value of your share usually goes up, and vice versa.

Bonds

• Companies and governments sell bonds as a way to borrow money from investors.• Bonds are certificates of agreements between borrowers and lenders. When you buy a bond, you lend your money to a company or the government for a specific period time, such as 5, 10, or 20 years.• In return, companies pay bondholders a fixed rate of interest over a specific period.

Mutual Funds

• Many investors find it easier and safer to invest in stocks and bonds by using mutual funds.• Mutual funds are companies that sell stock in themselves and pool the money to purchase a wide selection of individual stock and bonds in other companies.• In a mutual fund, financial

experts choose which stocks or bonds to purchase.

Review Questions and Answers – worth 20 points• You are to use your textbook (pg. 493-525) to create 10

questions and answers that you feel would make good test questions.• You are to put all of your questions on one sheet of

paper, and all of your answers on another sheet of paper. On the answer sheet, you also need to write down the page # where you got your information.• Once you have completed creating your questions and

answers, you will submit them to me and I will distribute another student’s questions to you for you to answer. • The first three students to complete the assignment

successfully will receive a reward.

Coming in 8th Grade…