Unit 5.01 – 5.03 MPA

Unpacked Content

A)Distinguish between economic goods and services (EC:002, EC LAP 10) (CS)

1)Define wants

a)Economic want

b)Noneconomic want

2)Define goods and services

a)Consumer goods

b)Industrial goods

c)Capital goods

B)Explain the concept of economic resources (EC:003, EC LAP 14) (CS)

1)Define economic, natural and human resources.

2)Factors of production

C)Describe the concepts of economics and economic activities (EC:001, EC LAP 6) (CS)

1)Define the following terms: economics, scarcity, economizing, opportunity cost, trade-offs, consumption, consumer, production, producer, exchange, and distribution

2)The three economic questions that all societies must answer

a)What will be produced?

b)How will the products be produced?

c)How will the products be allocated?

3)Describe four economic activities

a)Consumption

b)Production

c)Exchange

d)Distribution

D)Determine economic utilities created by business and marketing activities (EC:004, EC LAP 13) (CS)

1)Form utility

2)Place utility

3)Time utility

4)Possession utility

E)Explain the principles of supply and demand (EC:005, EC LAP 11) (CS)

1)Define the following terms: demand, law of demand, supply, law of supply, law of supply and demand, buyer’s market, seller’s market, elasticity, elastic demand, and inelastic demand

2)List the conditions required for demand to exist

a)Desire for a good or service

b)Buying power to pay for a good or service

c)Willingness to give up some buying power

F)Describe the functions of prices in markets (EC:006, EC LAP 12) (CS)

1)Relative prices

2)Substitution effect

3)Rationing

4)Equilibrium price

5)Excess supply

6)Excess demand

7)Market price

5.01 – How It’s Made (page 1)

Part I.

Directions: Students will answer the following questions as they follow a product as it makes its way through the production/distribution channel to the consumer. The teacher will assign a product or the student will choose a video from “How It’s Made” website to learn about how a product is made.

The website is

Industrial Goods and Services

  1. What is the product?
  1. Where is this product made (location)?
  1. What industrial goods were used to create the product?
  1. What classification of the industrial goods were used in the production of this product?. Use the following link to view the categories of classification. Manage Mentor website -
  1. Who provides the raw material to make the product?
  1. In your own words, describe the process used to create the product. Use complete sentences.
  1. What happens to the product after it is made?
  1. How does it get into the hands of the consumer?
  1. What is the consumer classification of this product - Convenience goods, shopping goods or specialty goods? Explain your answer. Use complete sentences.
  1. How is this product used?
  1. Who is the target market for this product?
  1. Where is this product sold?

5.01 – How It’s Made (page 2)

Part II.

Directions. Use your own resources to complete the following:

Define service industry.

Provide an example of a service industry.

Define consumer service.

Provide an example of a consumer service.

5.01 – Those Golden Jeans Activity (page 1)

As you go through the steps of this assignment, record your answers here.

Website used -

Part I.

Step 1

$2.00 a slice –

$1.50 a slice –

$1.00 a slice –

$0.50 a slice –

Price Per Slice / Quantity Demanded
You / Friend / Friend / Friend / Total
$2.00
$1.50
$1.00
$0.50

What happens to the number of slices of pizza, you and your friends are willing and able to buy as the price goes up?

What generalization can you make about the relationship between price and quantity?

After reading the art of pizza, answer the following:

  1. An example of a human resource in the first paragraph.
  2. An example of a natural resource in the fourth or sixth paragraph.
  3. An example of capital resources in the fourth paragraph.

5.01 – Those Golden Jeans Activity (page 2)

Part II.

List the productive resources beside the type of resource that it represents.

Natural –

Human –

Capital –

Look at the alternative prices for slices of cheese pizza and answer the following:

  1. How many slices are consumers willing to buy at $2.50?
  2. What problem does this create?
  3. How much would the surplus be at $2.00?
  4. Explain how you determined the amount of surplus.
  5. What would happen if the price is set at $1.00?
  6. How many slices are the pizza owners willing and able to supply at $1.00?
  7. At $1.00, how many slices are consumers willing and able to buy?
  8. How could this shortage be eliminated? Explain.
  9. A surplus exists at $2.50 per slice and a shortage exists at $1.00 per slice. How much could pizza owners charge for a slice of pizza without causing a shortage or a surplus? Explain.

5.01 – Those Golden Jeans Activity (page 3)

Part III.

You are now going to apply what you have learned to blue jeans. Using the websites provided, answer the following:

  • Find an example of a natural resource.
  • Find an example of a human resource.
  • Find an example of a capital resource.

Activity 2– Market Schedule for Blue Jeans

5.01 – Those Golden Jeans Activity (page 4)

Part III (continued)

What is the market clearing price or equilibrium for blue jeans?

Explain why this is the equilibrium price.

At what price would there be a shortage?

Why would there be a shortage?

At what prices would surplus occur?

5.01 Those Golden Jeans Lesson Plan

Adopted from:

5.01- Key Briefing: Economics Concepts and Activities

Define economics.

The study of how to meet unlimited, competing wants with limited resources
Describe two basic types of wants.
  • Economic wants: Desires for items that can only be obtained by spending money.
  • Noneconomic wants: Desires for things that can be obtained without money (e.g., fresh air and sunshine).

Discuss the characteristics of wants.
  • Unlimited: Everyone always has them. That includes individuals, businesses, and governments.
  • Changeable: Wants change. Think of things that children want vs. what teens wants vs. what adults want vs. what senior citizens want.
  • Competing: Everyone must choose which wants to satisfy at any one time because resources are limited. We don’t have enough resources to satisfy all needs at the same time.

Define and describe resources in economics.
Any items that can be used to produce goods and services. Categories:
  • Natural resources: Items that are found in nature that are used to produce goods and services. Examples include trees, air, and land.
  • Human resources: People. In economics, they are valued for the physical and mental work that they do to produce goods and services. They include anyone who works.
  • Capital goods: All of the manufactured or constructed items that are used to produce goods and services (e.g., buildings, equipment, transportation systems).

Discuss reasons for limited resources.
  • Natural resources: There simply are not enough resources available to satisfy everyone. We depend on the earth for practically all of our natural resources. As the world’s population increases, there will be more and more people making use of those resources. As a result, there will be fewer resources per person.
    Some natural resources are difficult or costly to obtain. For example, wind power can be difficult to capture when the wind isn’t blowing. Some developing countries lack the technology to tap their natural resources. And finally, weather conditions and the environment affect the supply of some natural resources.
  • Human resources: Only some of the world’s people are willing and able to work. Others, especially those who are young, disabled, or elderly, are not part of the workforce.
    Many parts of the world experience worker shortages in such professions as nursing and welding. This may be due to a lack of special training, or the people may not live in the geographic region where the job opportunities exist.
  • Capital resources: In some parts of the world, capital resources are limited due to a lack of technology. In under-developed societies, people still use primitive hand tools rather than mechanized machinery to produce goods and services. As a result, they produce fewer goods and services than we do in our society and those that they produce are for personal use rather than for capital goods.

What is scarcity?
This is the gap between unlimited wants for goods and services and limited resources. Economics is sometimes called the study of scarcity. Goods and services are said to be scarce, or limited, because not everyone can have everything s/he wants
The only ways to eliminate scarcity are to find unlimited resources or to limit human needs and wants. Neither one can happen.
Discuss the fact that scarcity requires economic choices.
  • Involves allocating resources: Resources must be directed to their best use.
  • Involves economizing: The process of deciding which goods and services to purchase or provide so that the most satisfaction can be obtained is known as economizing.
  • Involves opportunity costs: When we economize, we decide how scarce resources will be used. When people, governments, and businesses make decisions about allocating their resources, they feel that they will gain more satisfaction from one choice rather than from another. When a choice is made about the best use of resources, the next-best alternative that is given up is called the opportunity cost of that choice. This is the benefit that is lost from making one choice vs. another.
  • Involves tradeoffs: This means that individuals, businesses, and governments must be willing to give up all or a part of one thing to get something else. The trade-offs that everyone is willing to accept should be based on the opportunity costs involved.

Explain that making economic choices involves economic questions.
To use scarce resources efficiently, all societies must answer three basic economic questions:
  • What to produce?
    They must determine what and how many goods and services to produce. They must decide how to allocate their limited resources between the production of capital goods and consumer goods.
  • How will products be produced?
    Most goods and services can be produced in a variety of ways. Societies must decide the best, most efficient ways to use their limited resources to produce products.
  • How to allocate products?
    Societies must determine how the goods and services will be divided among people. They need to decide how individuals, businesses, and governments will share products.

Explain the relationship between economics and decision making.
The heart of economics is decision-making—choosing among alternatives. The objective of studying economics is to prepare for effective decision-making and responsible citizenship in society.

Describe major economic activities.

Today, people rely on others to provide them with at least some of the goods and services they desire. As a result, goods, services and resources must move, or flow, from one person to another. The following four economic activities make that movement possible.

  • Consumption
    This is the ultimate goal of all economic activity. It is the process or activity of using goods and services. Anyone who used goods and services is a consumer. People consume goods and services to satisfy their wants and desires.
  • Production
    For consumption to occur, goods and services must be produced. Individuals who make or provide goods and services are called producers. They transform natural, human, and capital resources into more valuable goods and services for consumers. Examples of producers: hairstylists, clothing manufacturers, farmers
  • Exchange
    Resource owners—people and organizations who provide human resources, natural resources, or capital goods for use in production—require some form of payment for the use of their resources. Usually, this payment is in the form of money—wages, salaries, profits for human resources; interest or rent for capital goods; etc.
    After acquiring enough resources from resource owners, producers are able to produce goods and services. Consumers make money payments to the producers for the goods and services. This money payment is the price of the good or service.

Distribution
This is the process or activity by which income is divided among resource owners and producers. Money received by resource owners and producers is known as income. Resource owners use their money to buy more goods and services. Producers use their income to buy more resources. Those receiving larger incomes are able to buy more goods, services, and resources than those with lower incomes.
Resource owners must feel that their incomes are large enough so that they will continue to supply resources. If they decided that their incomes weren’t sufficient, they may choose not to share their resources with producers. This would cause production to cease. Likewise, producers must receive enough income to continue making or providing goods and services. If they decided their incomes weren’t sufficient, they might choose not to make goods and services. In that case, consumption would cease. This results in a tug of war between resource owners and producers over how to divide the income they receive from consumers. The manner in which resource owners and producers divide their income depends on the type of economic system that exists.

5.01- Key Briefing: Economics Concepts and Activities

Graphical Organizer(page 1)

Define economics.

The study of how to meet unlimited, competing wants with limited resources.
Describe two basic types of wants.
  • Economic wants:
  • Noneconomic wants:

Discuss the characteristics of wants.
  • Unlimited:
  • Changeable:
  • Competing:

Define and describe resources in economics.
Any items that can be used to produce goods and services.
Categories:
  • Natural resources:
  • Human resources:
  • Capital goods:

Discuss reasons for limited resources.
  • Natural resources:
  • Human resources:
  • Capital resources:

5.01- Key Briefing: Economics Concepts and Activities
Graphical Organizer(page 2)
What is scarcity?
Discuss the fact that scarcity requires economic choices.
  • Involves allocating resources:
  • Involves economizing:
  • Involves opportunity costs:
  • Involves tradeoffs:

Explain that making economic choices involves economic questions.
To use scarce resources efficiently, all societies must answer three basic economic questions:
  • What to produce?
  • How will products be produced?
  • How to allocate products?

Explain the relationship between economics and decision making.

Describe major economic activities.

Today, people rely on others to provide them with at least some of the goods and services they desire. As a result, goods, services and resources must move, or flow, from one person to another. The following four economic activities make that movement possible.

  • Consumption
  • Production
  • Exchange Resource owners
  • Distribution

5.01 Economic Question Activity

The 3 Key Economic Questions every Society must answer:

As we have been learning, everyone is forced to deal with scarcity. We, as individuals, are forced to deal with it. We, as families, are forced to deal with it. And we, as societies, as countries, are forced to deal with it. The way we, as individuals, face it is through the choices we make. Since all of us make different individual choices, it stands to reason that we all use different methods, or reasoning, to arrive at those choices. Different societies & countries also use different methods to arrive at their choices. Because of scarcity (not enough to go around because of LIMITED resources), every nation is faced with The 3 Key Economic Questions Every Society Must Ask:

●What–goods & services should be produced?

“What to produce?” is an allocation question. All economic systems must determine how to allocate productive resources in the form of land (natural resources/raw materials), labor (work for which we earn pay) and capital (human - education & job training) (physical – buildings, equipment & tools).

●Who – consumes the goods & services produced in society?

“For whom?” is a public choice question. All economic systems must determine which goods and services will be available for public use and which for private use.

●How – should goods & services be produced?

“How to produce?” is an efficiency (the ability to do something or produce something without wasting materials, time, or energy) question. All economic systems must determine how goods and services will be produced.

In Column 1 list the three questions that each society must answer. In column 2 explain the question that must be answered.
Column #1 Column #2
1-
2-
3-

How do different economic systems respond to the 3 Key Economic questions? First of all, we need to define exactly what an “Economic System” is:

●The institutional framework of formal and informal rules that a society uses to determine

what to produce, how to produce and how to distribute goods and services.

Another, more popular term for economic system is economy. An economy, or economic system, is the structural framework in which households, businesses, and governments undertake the production and consumption decisions that allocate limited resources to satisfy unlimited wants and needs.

Economic systems can be categorized according to who makes most of the decisions in an economy. Most economies can generally categorized as one of two kinds:

●Market Economy

An economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-interest.

●Command Economy

An economy in which most economic issues of production and distribution are resolved through central planning and control.

So, how do different economic systems respond to the three basic economic questions? In a socialist or command system, the central authority determines what, how, and for whom goods and services will be produced. A Mixed System incorporates elements of both command and market systems in determining answers to the three questions. Mixed economies with strong market components also include a public goods and services sector, just as command economies like Cuba include a private goods and services sector.