Farming Irrigation

What is a Good?

Good – Physical objects such as clothes or shoes.

Goods do not just come about though, there is something needed to make sure that these goods can be made.

Goods

What do you use to make goods?

Resources Resources are needed to make goods.

Resources are usually separated into three categories called the Factors of Production.

Water is a Natural Resource

Factors of Production

Are land, labor, capital and entrepreneurship; the four groups of resources that are used to make all goods and services

Land

Includes all natural resources, such as minerals timber and water.

Labor

Refers to the physical and intellectual services of people, including the training, education and abilities of the individuals in a society

Capital

Refers to products such as machinery and equipment that are used in production. Physical Capital – All Human-made goods

that are used to produce other goods and services

Human Capital – The skills and knowledge gained by a worker through education and experience

Financial Capital - Money

Entrepreneurs/ Entrepreneurship Are ambitious leaders who decide how to

combine land, labor, and capital resources to create new goods and services

These are the people who make business possible.

They are the one’s who have the ambition to risk a lot to try and make a profit.

Some Famous Entrepreneurs Ray Kroc-McDonald’s Colonel Saunders-KFC Bill Gates-Microsoft J.Z.-Rockafella Records

Economists say that all goods and services are scarce because the land, labor and capital used to create them are scarce.

Consider French Fries. Started off as a potato in Idaho in a field 7.5 gallons of water irrigated the plot where it grew. Nurtured with fertilizers and protected by pesticides The potato was harvested, processed, frozen, and then

transported to Seattle. In Seattle it was fried in corn oil from Nebraska sprinkled

with salt from Louisiana and eaten in a restaurant. All of the resources used to make the French fries are

scarce. And this is just an example from a simple good such as a

French fry.

Economic Magic: Creating Something from NothingCapstone Unit 1 lesson 3 Picture yourself on vacation in spectacular Southeast Alaska, kayaking

with a group of friends. You can’t believe you are there. You have never kayaked before in you life, but the school had a special deal enabling students to spend a few says sea kayaking and whale watching. It sounded greet, so you went along.

It’s the end of July. The weather is warm and the scenery is spectacular. You’ve had good times and easy paddling so far, but today you’ve noticed clouds gathering and a chill in the air. Still, you an your friends climb into the kayaks and get started, thinking tha tif it does rain you will be able to dry off later, after you travel the day’s course and make camp.

Just as you expected, rain begins to fall, and it shows no sign of stopping soon. The clouds get darker, the rain pours down harder and harder, and the wind comes up! It becomes difficult to paddle in the waves. You might be in trouble. Then a huge wave hits the kayak and very quickly you capsize. But you and your friends remember your safety training. You grab hold of the kayaks and paddles and swim for the shore. Thank goodness you were careful to travel near land at all times. Gasping for breath and shivering from exposure to the cold water, you eventually drag yourself up onto the shore.

Now you have a new problem. You and your friends are stranded on a small, deserted island and you don’t know how long you will have to be there. The nearest settlement is over 75 miles away. Your task: Survive!

Activity 1

Which of the resources listed there are scarce (have more than one valuable use) which are not scarce

Visual 1 ..\Capstone\Capstone Visuals\capstone_lesson3_visual.

pdf Use your imagination to solve the problem, but remember

to consider the opportunity cost of each of your choices Get into groups Review the island’s environment and the equipment you

have left. Figure out how to survive.

What general type of behavior seems to be the same among groups of people trying to keep themselves alive? What choices are they making

Creating a survival plan forced the members of each group to decided which items were scarce resources and to make choices about alternative ways to use those resources.

What opportunity costs did people encounter in making their decisions?

Many items can be used in different ways, and the alternatives may be mutually exclusive.

People in all economies must decide what to produce, how to produce it and for whom it will be produced. How did your decisions relate to these three questions? What did you make to eat or for shelter? How did you make it? Who made it? What natural resources were used? What tools were used? Did everyone get a share of what was produced? Did the goods produced go only to those who

helped produce them? Did a leader decide who got what? Did those who did no work get any of the goods

produced?

Were your choices made randomly (by chance) or purposefully (considering alternatives)?

What alternatives did you consider before you made your choices about production and consumption?

How do anticipated costs and benefits explain the choices you made to survive?

Gain survival related benefits at the lowest possible costs.

Economic Approach

Two different football teams take different approaches to the game.

The Ravens take a defensive approach. The Colts take an offensive approach. In economics, economists take a

different approach at real world issues and problems.

They take what is called the Economic Approach.

Economic Approach

(or economic way of thinking) which means that the principles of scarcity and rational self-interest are used in a specific way to search out answers to questions about the real world

Positive Analysis

In economics and rational self interest you try to keep your opinions and heart out of the game. You try to make decisions based on what the most readily available and accurate information is trying to portray to you. When you do this you make what is called positive analysis.

Positive analysis – Analysis that does not impose the value judgments of one individual on the decisions of others

Our Government Tries to Make decisions using Positive Analysis

Normative Analysis

We are all humans, and we do have our own opinions, that is what separates us from computers or robots. And because of this, we do have a tendency to let our opinions get in the way. This is called normative analysis.

Normative Analysis – You are imposing your value judgments on the decision and desires of others

Fallacy of Composition

If I see that the school is burning down and I run out as fast as I can this is in my best interest. I will probably get out before everyone else, and will not get hurt.

If everyone in the school were to do the same thing, there would be chaos and nobody would be guaranteed safety. This is why we practice fire drills.

This situation happens in economics too and is called the fallacy of composition

Fallacy of Composition – The mistaken assumption that what applies in the case of one applies to the case of many

Homer might not make it out of the building

Association as Causation

What if I were to tell you that every time we have a sunny day in September, my dog behaves better. This may be the case that every time there was a sunny day my dog behaved better, but he has also behaved good on non-sunny days in September and throughout the whole year. This is called association as causation

Association as Causation – The mistaken assumption that because two events seem to occur together, one causes the other

Every time these dogs go to this pizza place it snows