Chap 01

UNIT
The following transparencies may be used at any time during Unit 1.

1 Resource Manager

Economic Forms and Financial Pages Transparencies
Transparency 4 Transparency 5 Transparency 6
4 5 6
A PPLICATION FOR EMPLOYMENT M AP OF THE UNITED STATES C IRCLE GRAPH
EMPLOYMENT APPLICATION SOCIAL SECURITY NUMBER: ___ ___ ___ ___ ___ ___ ___ ___ ___
NAME _____________________________________________________ STREET ADDRESS ________________________________________________
FIRST NAME MIDDLE NAME LAST NAME
APT. NO. AREA TEL..
OR BOX __________ CITY ____________________ STATE __________ ZIP_____________ CODE _________________ NO. ________________
WHAT JOB ARE YOU APPLYING FOR? ___________________________________________________________________________________________

ARE YOU 18 YES EVER WORKED YES
OR OLDER? NO. IF NOT, BIRTH DATE ___________________ HERE BEFORE? NO. IF YES, DATES ______________________________
AVAILABILITY: M T W T F S S
TOTAL HOURS AVAILABLE PER WEEK _____________ HOURS FROM NH
ARE YOU LEGALLY ABLE TO AVAILABLE: TO WA
BE EMPLOYED IN THE U.S.? YES NO
VT
HOW DID YOU HOW FAR DO YOU DO YOU HAVE MT ND ME
HEAR OFJOB? __________________________________ LIVE FROM HERE?___________________ TRANSPORTATION TO WORK? ___________
OR MT
SCHOOL MOST RECENTLY ATTENDED:
NAME _____________________________ ADDRESS _____________________CITY ________________ STATE _________ PHONE_____________ ID MA
SD WI NY
TEACHER OR LAST GRADE GRADE
COUNSELOR _____________________________ DEPT. ____________________ COMPLETED _________________ POINT AVERAGE __________
WY MI
RI
SPORTS OR IA PA CT
GRADUATED YES NO NOW ENROLLED? YES NO ACTIVITIES _______________________________________________ NV NE
OH NJ
UT IN
THREE MOST RECENT JOBS: IL DE
CA CO WV
1) COMPANY ____________________________________ ADDRESS ____________________________CITY ________________ STATE _________
KS MO VA MD
PHONE ____________________________________ JOB __________________________________________________________________________ KY
DC
SUPERVISOR ____________________________________ DATES WORKED: FROM _________________________ TO: ____________________ NC
TN
SALARY ____________________________________ REASON FOR LEAVING ________________________________________________________
AZ OK
NM AK SC
AL GA
MS
PHONE ____________________________________ JOB __________________________________________________________________________
TX LA
SUPERVISOR ____________________________________ DATES WORKED: FROM _________________________ TO: ____________________
.
FL
PHONE ____________________________________ JOB __________________________________________________________________________
SUPERVISOR ____________________________________ DATES WORKED: FROM _________________________ TO: ____________________
PERSONAL REFERENCES:
NAME __________________________________ NAME __________________________________ NAME ___________________________________
ADDRESS _______________________________ ADDRESS ________________________________ ADDRESS ________________________________
PHONE _________________________________ PHONE __________________________________ PHONE __________________________________ Alaska Hawaii

GENERAL
What additional relevant experiences or training have you had other than your work experience and education?
______________________________________________________________________________________________________________________________
Activities civic, athletic, fraternal, etc.
______________________________________________________________________________________________________________________________
I understand that as a part of the procedure for my employment application an investigative consumer report may be made concerning
my character, general reputation, and mode of living. I will be provided the name and address of the agency that supplies the informa-
tion and a copy of the report if I am denied a job because of the information the report contains.
Signature________________________________________ Date _________________________
Economic Forms 5
Economic Forms 6
Economic Forms 4
Economic Concepts Transparencies
Transparency 1 Transparency 2 Transparency 4
1 2 4
S CARCITY O PPORTUNITY COST & TRADE-OFFS E CONOMIC SYSTEMS

The cartoon depicts an economic choice the father must make because of the scarcity of a limited The cartoon illustrates the economic concept of opportunity cost and trade-offs. It shows that every time we The U.S. Constitution provides the political, social, and legal framework for the economic system in our country.
resource: his time. make a decision, we have to give up something.
CALVIN AND HOBBES 1988 Watterson. Reprinted with permission of UNIVERSAL PRESS SYNDICATE. All rights reserved.
Economic Concepts 1 Economic Concepts 2 Economic Concepts 4
Real-World Economics Additional Glencoe Resources for This Unit
Have your students learn about investing and Nightly Business Report Economics & You
managing their financial futures by participating in Video Program
the exciting simulation The Stock Market Game .
See Teacher pages in front of book for more informa- Economic Survival: A Financial Simulation
tion. Interactive Economics! Software
Strengthen students' research, cooperation,
presentation, and critical thinking skills by having
them compete in the Fed Challenge. See Teacher
pages in front of book for further information.
1A
UNIT
1 Resource Manager

Assessment and Evaluation

Unit 1 Test Unit 1 Test
Form A Form B
Name Date
Unit 1,
Class
A
Name Date
Unit 1,
Class
B
Use the following tools to easily
A N INTRODUCTION TO ECONOMICS Name Date SCORE Class A n Introduction to Economics Name Date SCORE Class assess student learning:
USING KEY TERMS Unit 1, A USING KEY TERMS 1, B
Matching: Match each item in Column A with the items in Column B. Write the correct
letters in the blanks. 13. In a capitalist economy, most property is owned by
a. government. b. banks.
letters in the blanks. 14. All the combinations of goods and services that can be produced in a given time with a fixed amount of
resources are called
Performance Assessment Strategies and
A B A B a. factors of production. b. costs of production.
Activities
c. individuals. d. businesses.
1. opportunity cost a. economic system in for
which economic decisions 1. competition a. c. well-being an individual, group, or nation meas-d. production possibilities.
opportunityofcosts.
14. Another term a market economy is are made by material
the government ured
15. by how well their refers
Entrepreneurship need for necessities
to the ability toand luxuries is
2. trade-off a. command economy. b. free enterprise system. 2. standard of living satisfied
b. graphc.showing the maximal combination of goods and
mixed economy. d. democratic system. a. manage other people.
3. microeconomics services that can be produced from a fixed amount of 3. laissez-faire b. economic system
b. adapt in which the
technology government minimizes its inter-
efficiently.
4. factors of production
5. economic equity
c.
d.
15. A pure market system has all of the following characteristics except
resources
a. workers
situation in whichare
satisfyc.every
government
free to
people do sell
nottheir enough resources tob. sellers and buyers make their own decisions.
havelabor.
desire regulates some prices.
economic system in which the government minimizes its inter-
d. individuals own the factors of production.
4. profit incentive
5. scarcity
c.
d.
ference in the economy
c. start new businesses, introduce new products and processes, and improve management techniques.
condition of not capital
d. borrow
ices one wants
being able to have and
successfully all ofexpand
the goods
that part of economic theory dealing with the economy

and serv-
an existing business to meet customer demand. Section Quizzes
CRITICAL THINKING QUESTIONS
Chapter and Unit Tests

6. competition ference inTHINKING
CRITICAL the economy QUESTIONS 6. trade-off as a whole and decision making by large units, such as
e. the branch of economic theory that deals with behavior and governments
7. scarcity decisionAnswer
makingeach
by small units, such as individuals and firmson a separate sheet of paper.
7. entrepreneurship Directions: Answer each of the following sets of questions on a separate sheet of paper.
e. sacrificing one good or service to purchase or produce
Directions: of the following sets of questions
f. land, labor, capital, and entrepreneurship another the Main Idea What is the difference between scarcity and shortage?
16. Finding
8. production possibilities curve 16. Understanding Cause and Effect What effect has technology had on productivity? 8. command economy
f. Formulating
rivalry among businesses
Questionsto gain Hownew customers
ExamView Pro Testmaker

g. value of the next best alternative given up for the alternative 17. might you test the hypothesis that teenagers might be reluctant to purchase
9. command economy 17. Finding
that wasthe Main Idea How are the three economic questions answered in a free enterprise system? What
chosen
9. economic growth g. anability
item of
of risk-taking
clothing if individuals
its price was
tovery low?new products and
develop
are the major aims of such a system? start new businesses in order to earn profits
10. laissez-faire h. the attempt to balance an economic policy so that everyone 10. macroeconomics
benefits fairly h. economic system
APPLYING SKILLS in which the government controls the fac-
APPLYING
i. SKILLS
rivalry among businesses to gain new customers tors of production and makes all decisions about their use
j. sacrificing one good or service to purchase or produce

Using Graphs: Study the graph and answer the questions below.
another
i.
Usingexpansion
wealth
j.
of the
Charts and economy
Tables: to produce
Study
Production
desire to make money
sell goods and services
more
the table andgoods,
answerjobs,
Possibilities
that motivates
theand
people
questions below.
fortothe High-Fidelity
produce and Equipment Company
Interactive Tutor Self-Assessment Software
Copyright by The McGraw-Hill Companies, Inc.
RECALLING FACTS AND IDEAS Number of Number of
Multiple Choice: In the blank at the left, write the letter of the choice that best completes
the statement or answers the question.
11. Scarcity always exists because
RECALLING FACTS AND IDEAS
2,100
Multiple Choice: In the blank at the left, write the letter of the choice that best completes
Digital Televisions
2,000
Stereo Systems
10,000
9,500
SAT I/II Test Practice
the statement or answers the question.
MindJogger Videoquiz
2,200 9,000
a. stores cannot stock enough merchandise to keep up with customer demand.
11. A laissez-faire system is one in which 2,300 8,500

b. factories sometimes have difficulty producing enough goods.
c. there is not enough of all goods and services to satisfy everyones needs and wants. a. government controls the factors of production.
d. natural disasters, such as hurricanes and floods, destroy goods and property. b. individuals and the government make 18. economic
How manydecisions.
stereo systems can High-Fidelity produce if it produces just 2,000 digital television sets?
c. government interference in the economy is minimal.
12. In a command economy, decisions about production are made by
a. corporations.
c. individuals.
b. partnerships.
d. government.
18. On Wednesday Oil & Tune Garage wants to run a sale on oil changes. What is the maximum number of oil
d.
19. Why does the production of the number of stereo systems decline as the production of the number of television
government purchases goods and services from consumers.
sets rises?
20. What would High-Fidelity need to do to produce 3,000 digital televisions and 12,000 stereo systems?
tx.ett.glencoe.com
changes it can provide?
19. Is six tune-ups are scheduled for next Thursday, how many oil changes can be scheduled that same day?
Chapter and Unit Tests 20. What is the opportunity cost of providing three oil changes? 89 Chapter and Unit Tests 91
90 Chapter and Unit Tests 4 Chapter and Unit Tests
Application and Enrichment

Business Week Focus on
Economics Laboratory 1 the New Economy
Name Date Class Name Date Class
1 1
Name Date Class
E CONOMICS: NO FREE LUNCHES 1 STEP 3. QUANTIFY THE GRAPH

Understanding a general relationship between choices and costs is important. But to make a good economic decision,
The heart of economics can be summed up in just one word: TNSTAAFL. Of course, TNSTAAFL isnt a real wordjust you need hard figures.
try to pronounce it! TNSTAAFL is an acronym. It stands for Theres no such thing as a free lunch.
STEP 2. GRAPH THE RELATIONSHIP BETWEEN A CHOICE 7. Conduct research to find out a typical hourly wage paid at places you work, or might work. ________________
How does TNSTAAFL explain economics? The answer is that economics is, above allAND ITS choices.
else, about OPPORTUNITY
Its the study COSTS
of what people choose to do with limited resources. For example, if you decide to use your money (a limited resource) 8. Complete the table below. Then graph the columns Hours of Free Time and Wages Earned.
to buy a video game, you are making an economic choice. Many or all of the items you listed in the chart in Step 1 involve spending your time. You can show your options for
using this resource in a graph. Hours of Hours Wages
Free Time Worked Earned
Actually, you are making two choices. One, you are choosing to use your money on a video game. Two, you are
3. Suppose you have a total of 20 hours of free time each week. You could work and earn extra money during
choosing to not use that money for something else. Economists call this second choice the opportunity cost, because 20 0 0
part or all of that time. Complete the table below to show some options for spending your time. Then graph
using a resource for one choice costs you the opportunity to use that resource for another choice. Every economic 18
the data.
choice, no matter how beneficial, has an opportunity cost. In a word, TNSTAAFL.
16
Wages Earned
Hours Free
Instructions: Explore opportunity costs in your own life by completing the following activity. You will need 20 14
Worked Time
a pencil or pen and your textbook. A calculator is optional. 18 12
0
16 10
Hours of Free Time
2
STEP 1. IDENTIFY THE RESOURCE AND OPPORTUNITY 14 8
COSTS OF AN ECONOMIC CHOICE 4
12 6
6
1. One of the most fundamental economic choices you will ever make is to work. Like every other economic choice, 10 4
choosing to work has opportunity costs. Think about what they might be. What will you have8to give up if you 8 2
work every day after school or on the weekends? List as many as you can in the chart below.10
6 0
12 4 2 4 6 8 10 12 14 16 18 20
The Economic Choice Hours of Free Time
What This Choice Forces You to Give Up 14 2
You Make
17
1. 20 O 2 4 6 8 10 12 14 16 18 20 STEP 4. MAKE AN ECONOMIC CHOICE
Working after school Hours Spent Working
and on weekends 2. The steps you have just takenidentifying an economic choice, considering its opportunity costs, quantifying their
4. Describe the relationship between work time and free time shown by the graph. Is the relationship direct or
relationships, and comparing optionsare the same basic steps used to make any economic decision.
3. inverse?
9. Think about your work. For the purposes of this lab, how many hours do you choose to work each week? Why?
2. Nations may have limited natural resources, but the most
limited resources of individuals are money and time. Look at

your chart above. Which of these resources are you giving
up when you decide to work?
5. Explain how the graph illustrates the concept of TNSTAAFL.
6. Does the graph show a single economic choice or a range of choices? How is it like a production possibilities
curve? Explain your answer.
ECONOMICS
Glencoe's Web sites provide additional resources. All essential content is covered in the Student Edition.
tx.ett.glencoe.com socialstudies.glencoe.com Glencoe's Guide to Using the

Visit the Economics Today and Visit the Glencoe Social Internet provides an introduction
Tomorrow Web site for Chapter Studies Web site for additional to many of the current Internet
Overviews, Textbook Updates, social studies activities, updates, technologies, social studies and
Student Web Activities, Web and links to other sites. professional resources, and
Activity Lesson Plans, and Self- teaching strategies.
Check Quizzes.
1B
Introducing
UNIT 1
Unit Objectives
After studying this unit, students will
be able to:
Define economics and outline
the basic principles of economic
systems.
Compare the ways traditional,
command, market, and mixed
economies answer the basic eco-
nomic questions.
Characterize the American free
enterprise system.
Unit Overview Chapter 1

The two chapters that comprise What Is Economics?
Unit 1 provide an introduction to Chapter 2
economics.
Chapter 1 explains or describes
Economic Systems and the
economics, the major economic American Economy
principles, the use of economic
models, and why studying econom-
ics is important.
Chapter 2 explains how various
economic systems address the four
basic economic questions. In this unit, read to FIND OUT . . .
what role economics plays in your life.
Out of Time? what role you play in the economic system of the
United States.
If time does not permit teaching
each chapter in this unit, you may
the various kinds of economic systems in the
world.
use the Audio Program that
includes a 1-page activity and a Youand every consumer
1-page test for each chapter. around the worldface
trade-offs among your
economic choices.
ECONOMIC SIMULATION
Trade-Offs Have the class assume the role of a government committee charged with
hearing arguments for and against increasing the amount of timber that can be cut in
Tongass National Forest, Alaska. Select six students to research the subject: three to
speak for a timber company, and three to speak as environmentalists. Have the six stu-
dents present their arguments to the class. Then ask the class to discuss the issue to
reach a consensus. In a follow-up discussion, ask students to explain how the concepts
of scarcity and choice played a role in their decision.
ECON: 2A-B, 5A, 12B, 21A, 23A, 23D, 24D
Introducing
UNIT 1
Your decisions as a consumer
Making It Relevant
determine how many goods ASK: What role does economics
and services will be produced. The United States and Japan play in your life? Remind students
have market economiesalso that many of them receive payment
known as free enterprise. for part-time jobs or chores. Also,
they regularly make purchases
clothes, books, CDs, and so on.
Then point out that when they
agree to a particular payment for
the jobs or chores they do or decide
to make a purchase, they are mak-
ing economic decisions.
ECON: 1B, 4A-B, 5A, 25B
To find up-to-date news and

analysis on the economy, busi-
ness, technology, markets,
entrepreneurs, investments,
and finance, have students
search feature articles and spe-
cial reports on the Business
Week Web site.
The gears that run every www.businessweek.com
nations economy are the factors
of productionland, labor,
capital, and entrepreneurship.
The basic problem facing

every type of economy is
the presence of scarcity.
1
Ask students to watch the local and national television news broadcasts for one week.
Have them note the number of news items on each broadcast that deal with economic
issues. Suggest that they record the economic issue addressed in each item, and the time
given to each item. Encourage students to present the data they collect in chart form.
ECON: 24C-D
1

CHAPTER
1 Resource Manager

Teaching Transparencies Application and Enrichment

Economic Concepts Economic Concepts Consumer Applications
Transparency 1 Transparency 2 Enrichment Activity 1 Activity 1
Name Date Class
Name Date Class
1 2
1 1
M AKING ECONOMIC DECISIONS
S CARCITY O PPORTUNITY COST & TRADE-OFFS
W HAT IS ECONOMICS? In many ways, economics is the study of making choices. However, making wise choices is
not always easy. The five-step decision-making model described below can help you analyze
The cartoon depicts an economic choice the father must make because of the scarcity of a limited The cartoon illustrates the economic concept of opportunity cost and trade-offs. It shows that every time we ECONOMIC CHOICES problems and make reasoned choices.
resource: his time. make a decision, we have to give up something.
Five-Step Decision-Making Model
In computer simulations, as in life, consumers make choices that send them along different
paths. Jon, a college student at a major university, has a full-tuition scholarship. His parents 1. State the problem.
pay room and board. After they pay their own bills, there is little left over for spending money 2. List the alternatives, or choices.
for their son. Jon has 20 hours a week of free time after classes and two choices of what to do
with that time. Help Jon determine the best choice. 3. List the criteria.
4. Evaluate alternatives, using the criteria.
Directions: Write down Jons financial considerations in the first box. In the second box, write the social
5. Make a decision.
implications. In the third box, list how these choices might immediately affect Jon personally. How might
they affect him one year from now? Five years from now? Directions: Use the decision-making model above and the following problem to complete the grid and
the exercises.
Problem: Sandys part-time job earns her only $80 of take-home pay. This week her expenses are especially heavy.
How should Jon spend 20 hours a week? She wants to go to a rock concert, which will cost her $30. Her friend Rafaels birthday is also this week, and the
present she wants to buy him costs $25. In addition, Sandys car needs a brake repair, which costs $150. The repair
work should be done this week if the car is to be safe to drive. If Sandy pays for the first $75 in repairs, her dad will
CALVIN AND HOBBES 1988 Watterson. Reprinted with permission of UNIVERSAL PRESS SYNDICATE. All rights reserved. pay the remaining $75.
20 hrs Work at Burger Boy 6 hrs Go out for track
for $8.00/hr 14 hrs Work at the library Decision-Making Grid
for $6.00/hr Problem Alternatives Criteria for alternatives
1. 1. brake repair 1. safety
2. 2.
Financial Implications: Financial Implications:
2. 1. 1.
Copyright by The McGraw Hill Companies, Inc.
2. 2.
3.
3. 1. 1.

Social Implications: Social Implications:
2. 2.
1. How should Sandy spend her $80?
Immediate Effects: Immediate Effects: 2. What does Sandy gain with this choice? What does she lose?
3. What is Sandys opportunity cost based on her choices?
Economic Concepts 1 Economic Concepts 2
Application and Enrichment

Free Enterprise Cooperative Learning Primary and Secondary Math Practice for Economic Cartoons
Activity 1 Simulations and Problems 1 Source Reading 1 Economics Activity 1 Activity 1
Name Date Class Name Date Class Name Date Class Name Date Class Name Date Class
1 1 Name Date Class

1 1 1
F ACTORS OF PRODUCTION
1 C HOICES, CHOICES
P RODUCTIVE RESOURCES G ETTING AND SPENDING A NALYZING TRADE-OFFS
Economics is first, and finally, about choices. What to make? What to buy? How much to spend?
In a market economy, individuals are free to choose the way they will make a living. The follow- Governments andhow
businesses have.finite When making an economic decision, you need to be aware of all the costs involved. Suppose
GROUP PROJECT Thats we get rich, . . by resources
the way weandmake
needour
to prioritize theirThe
Orman, Suze. spending
Courage to accord-
Be Rich. New York: Riverhead Books, 1999. The way individuals and businesses choose to answer such questions is the stuff of economics. It is
ing passage shows how one entrepreneur filled a need and made a profit in a market economy. ingly. choices
Individuals, too,choices
and the need towemake
make.economic choices, according to financial planner and you need to buy a car to get back and forth to work. Your choices are: also the stuff of political cartoons, since many economic choices are controversial.
Levis Jeans The resources people use to satisfy needs and wants are called factors of production. Factors author Suze Orman. As you read the excerpt below from Ormans best-selling book The
A. A new subcompact costing $13,000, Directions: Study the cartoon below. Then answer the questions that follow.
In 1850 a 20-year-old immigrant named Levi Strauss sailed for San Francisco. He planned to sell goods to miners of production can be classified into four areas: land, labor, capital, and entrepreneurship. Courage to Be Rich, consider the reasons you make certain spending choices and think about
who were digging for gold in California. By the time Strauss arrived in San Francisco, however, he had sold most All four types of resources are used to produce goods and services. In the following activity, what youANALYZING
must do withoutTHE READING
to make those purchases. Then answer the questions that follow. B. A 5-year-old car with 60,000 miles for $5,000, or
of his goods to other travelers headed for the gold fields. All he had left was canvas, which he planned to sell for you will organize resources into the different factors of production. Then you will learn how C. An old junker with 150,000 miles for $800.
making tents. the factors of production can be combined to produce goods and services. 1. According to Orman, why do people spend money so freely?
When Strauss reached the gold fields, he found that the miners needed tough pants. So instead of selling tents, W e work hard for our money; forty hours or more a At the next table I tasted some raspberry-mint jam: Which one should you choose? Complete the following exercises to find the initial costs and
he hired tailors to make his canvas into trousers. Word spread quickly that Strauss pants were durable, and soon the MATERIALS: week, and once were set loose from the workplace, we delicious. But worth $6 more per jar than I usually spend the yearly costs of owning each car for 4 years.
new pants were in great demand. Yellow Pages (old copies will work) 2. a. How
go shopping. We buy
muchfood
moreand clothes
would the and
authorstuff,
payandfor soapfor jam?
each I dont
year if shethink so. . .from
switched . her ordinary brand?
Convinced that his product would remain popular, Strauss went into business with his brothers, Jonas and Louis. then we say we just dont know where the money went.
They founded Levi Strauss and Company in 1853. The brothers bought a building and converted it into a factory. They But if we valued money over things, over the items it can INITIAL COSTS
Entrepreneurship
purchased scissors, sewing machines, needles, canvas, thread, and snaps. Finally, they hired workers to cut, sew, and buy, then web.would know more
How much exactlywould
wheresheourpay
money
for awent.
jar of jam? Our consumer culture makes us
Labor Capital Individuals ability to start
deliver the jeans to stores. Today Levi Strauss & Co. has production plants around the world and sells more than a We would change our money/thing ratio so that wed Some initial expenses of owning a car must be paid in cash. Typical costs for these items are shown in table 1.
Land Anyone who works and Property used to make other new businesses and take want things, and easy credit
billion dollars in jeans each year. have more money than things. We would take great plea-
Natural resources the work they do goods and services risks with financial capital c. What point is she making by citing these comparisons?
sure in seeing our money and watching it grow. Barring enables us to have them, long
Directions: Use the information above to complete the following exercises. 1. Complete table below. Use the car costs above and a sales tax rate of 5%.
unexpected illness, we would have no debtand, for that c1998Wiley Miller, The Washington Post Writers Group. Reprinted with permission.
matter, no doubt. We would always know when we could before weve paid for them.
1. You have learned about the factors of production, or the resources needed to produce goods and services. List Initial Expense Cost for Car A Cost for Car B Cost for Car C
3. What are
afford something wethe bad to
wanted habits
buy;that
and make money
we would vaporize into nothingness that the author refers to?
also
the major resources that the Strauss brothers needed to make canvas trousers, or jeans. EXAMINING THE CARTOON
be more likely to be able to buy the things we truly want- a. Title and registration $100 $100 $100
ed. But it is in just this waypremium this and designer
b. Sales tax $13,000 0.05 $650 Multiple Choice
Our consumer culture makes us want things, and thatthat our spending inches up, our scale of living
easy credit enables us to have them, long before weve inches up, we upgrade a little here and a little there, to (Cost of car times 0.05) 1. What economic choice or choices are symbolized by the cartoon?
paid for them. Bigger and better, or smaller and bet- the point where those things we once thought of as lux-
2. All resources fall under these categories: Land includes natural resources that are used to make a product; labor c. 3 months of insurance $350 $250 $220 a. the economic choice to hire cheaper labor b. the economic choice to reduce business costs
ter. . . . Entire new arenas of consumer goods keep uries have become necessities. With three relatively small
is made up of the workers; capital includes tools, buildings, and equipment; entrepreneurship is the ability to
d. Total initial cash costs $1100
c. the economic choice to enhance a companys image d. all of the above
opening up, enticing and seducing us. No one can say no indulgences at that store, assuming I never went back to
combine the other three resources to make or improve a product or service. Place each resource you listed in
Exercise 1 under the correct heading in the chart. COOPERATIVE GROUP PROCESS: all the time.
4. Give my usual
. . .an example of a recent economic choice you made. brands,
Would OrmanI would haveyour
consider raised my cost
choice wiseoforliving by
unwise? 2. Whom do the men with briefcases symbolize?
Not long ago I was in a gourmet and gift shop where almost $200 a year. 2. Assume that you have saved $2,000 for the purchase. How much of this money will you be able to put towards a. a particular business b. a particular industry c. any business d. large firms
1. Individual Work Stage 1: Students work individu- fertilizer (land), a gardener (labor), and a truck there were giveaway samples on all the display tables, Now it could just so happen that soap, vinegar, and the purchase price of each car?
Land Labor Capital 3. Which word best describes the cartoonists view of the choices that big business tends to make?
ally. Using information in your textbook, become (capital) combine to produce landscaping services. making the shopping experience feel like a party. On one jams are items that really matter to me and that the
table they were offering slivers of very pretty fragrant thought of having these exquisite varieties makes me feel Car A: Car B: Car C: a. self-serving b. altruistic c. careful d. rash
familiar with how to classify resources into factors

4. Group Work/Analysis Stage 4: Students work in

of production. Consult the local Yellow Pages for soap. You bought this brightly colored soap not in stan- so great and pampered that the extra $200 a year would
groups of four. Each student should read his or her 3. For cars A and B you will need to take out a loan. Find how much you need to borrow for each car.
dard bars but by weight; theyd cut what you wanted be worth it to me. If that were the case, well, then I might Critical Thinking
your area. Find five or more resources that illustrate list of resources aloud to the group. Using members
each of the four factors of production and record from a bar the size of a loaf of bread: $10 a pound. I did have decided that I was going to buy them anyway, a. Loan for car A: b. Loan for car B:
lists, determine how many combinations of all four 4. Analyzing the Cartoon How do Santa Claus and the businessmen create a strong contrast?
them in the table above. a quick calculation, and figured that if I were to switch extravagant or not. But if I valued money over things,
factors of production you can make to produce from my 5. ordinary
Why do soap
you think consumers
to this oftenI choose
fancy soap, would to
be purchase expensive
I would name-brand
find that $200 fromitems over their
somewhere less
else in expensive
my life,
2. Paired Work Stage 2: Students work in pairs. goods or services. For example: commercial property counterparts? Explain your answer.
YEARLY COSTS
spending $100 more a year on soap. not simply tack on to my spending an extra $200 a year
Compare your lists of resources. Determine how (land), software developers (labor), computers At another table, they were offering teeny cups and in order to feel good. Because its not just $200 today
many pairs of your resources might work together (capital), and small business owners (entrepreneur- 4. Annual costs for a 4-year loan at 10% will be about $30 for each $100 borrowed (30/100 amount borrowed
3. Did the Strauss brothers possess entrepreneurship? Explain. spoons with various kinds of gourmet vinegars for cus- thats at stake. Its also $200 next year and every year 5. Expressing Your Opinion Do you think the Santas workshop idea is effectively used in this cartoon? Why
to produce goods and services. For example: water ship) combine to provide technological services. tomers to tasteblueberry tarragon, cabernet sauvignon, thereafter. Beyond that, its $200 thats being used for 4). How much are the approximate total costs (4-year loan, plus downpayment, plus initial costs) for each car?
or why not?
(land) and a plumber (labor) can be paired to pro- cognac, and fig. They were exotic-tasting, its true, but todays small pleasures at a far greater cost to tomorrow.
duce plumbing services. Group Process Questions each bottle of vinegar cost $14$10 more than I usually . . . To choose rich is to make every penny count,
3. Group Work Stage 3: Students work in groups of Were the goals of the assignment clear? pay for my perfectly fine vinegar. Another quick calcula- every dollar count, every financial choice count. To erase 5. Assume that at the end of 4 years Car A is worth $7000, Car B is worth $1000, and Car C is junk, having cost
three. Compare members lists of resources. See Did each member contribute ideas to the group? tion, and I realized that if I switched to these fancy the bad habits that make money vaporize into nothing-
$3,000 in extra repairs. Calculate your total costs by subtracting the value of Cars A and B from your costs and
how many combinations of the three factors of vinegars, I would be spending maybe $50 more a year on ness. To distinguish between necessity and luxury, and to
production you can develop from members lists Did each member share information? vinegar than I do now. choose your luxuries very, very carefully. . . . adding $3,000 to C. Which car would you choose? Why?
that will produce a good or a service. For example: Did members listen carefully to each others
contributions and give helpful criticisms? Primary and Secondary Source Readings 1
2 Primary and Secondary Source Readings
Review and Reinforcement

Critical Thinking Economic Vocabulary Reinforcing
Activity 1 Reteaching Activity 1 Activity 1 Economic Skills 9
Name Date Class Name Date Class Name Date Class Name Date Class
1 1 9
W HAT IS THE MAIN IDEA? W HAT IS ECONOMICS? C HAPTER 1 WHAT IS ECONOMICS? S EQUENCING AND CATEGORIZING INFORMATION
When finding the main idea in a passage, you should organize the information given and Directions: Consider the following situation and, using the information you learned in the chapter, answer Directions: Complete each sentence by filling in the blanks with vocabulary terms from Chapter 1. Then Sequencing involves placing facts in the order in which they occurred. Categorizing involves
then assess the most important concept to remember. The excerpt below, for example, is from the questions below. rearrange the letters marked by in the blanks at the bottom of the page to find the hidden term. organizing information into groups of related facts and ideas. Both actions help you deal with
the introduction to economist Robert Heilbroners 1953 book The Worldly Philosophers. large quantities of information in a manageable way.
The town of Longford has a population of 2,959 and two factories. One factory produces
Directions: To determine the main idea, read the excerpt below and then answer the questions that wooden puzzles; the other produces ball bearings used in aircraft. Together these two 1. is the study of how individuals, families, businesses, and societies use
Directions: Read the following paragraphs and create a timeline that correctly sequences the events
follow. companies employ 165 workers. Both factories would like to purchase the 30-acre Grove limited resources to fulfill their unlimited wants. described. Then on a separate sheet of paper, categorize the information in the paragraphs into events that
Woods, which is owned by the town, in order to expand their facilities. When the town decides occurred before the euro was introduced and events that will occur after the euro is introduced.
By all rules of [the] history books, they were nonentities: they commanded no armies, sent no men to their deaths,
ruled no empires, took little part in history-making decisions. . . . Yet what they did was more decisive for history than
which business to sell the land to, it will consider how the sale might affect the residents.
2. The need to make choices arises from the of resources. On January 1, 1999, citizens of the 11 European nations woke up to a new currency. The European Monetary Union
many acts of statesmen who basked in brighter glory, often more profoundly disturbing than the shuttling of armies (EMU) had been the subject of heated discussion ever since it was conceived in the 1980s by German Chancellor
back and forth across frontiers, more powerful for good and bad than the edicts of kings and legislatures. It was this:
they shaped and swayed mens minds.
1. What is scarcity? Explain how scarcity is involved in the choice that the town must make. 3. are the resources needed to Helmut Kohl of Germany, French President Franois Mitterand, and the President of the European Commission,
Jacques Delors. At the stroke of midnight on December 31, 1998, the euro came into being in all participating
make goods and services. countries. The national currencies were turned into subdivisions of the euro according to the fixed euro conversion
And because he who enlists a mans mind wields a power even greater than the sword or the scepter, these men
rate, which was set on that day. The countries participating in the monetary union agreed to do so when they signed
shaped and swayed the world. Few of them ever lifted a finger in action. . . . But they left in their train shattered
empires and exploded continents, they buttressed and undermined regimes, they set class against class and even 4. Those natural resources present without human intervention are called . the Treaty of Maastricht in 1992.
nation against nationnot because they plotted mischief, but because of the extraordinary power of their ideas.
. . . A man who thinks that economics is only a matter for professors forgets that this is the science that has sent men to 2. If the puzzle factory purchases the land, its expansion would create 30 new jobs. The ball bearing factory would 5. The work people do producing goods and services is called . The changes brought about by the adoption of the new European currency, are not immediately obvious to the public.
The old national coins and notes will continue to be legal tender until July 1, 2002. On that date, the euro will go into
the barricades. . . . No, the great economists pursued an inquiry as excitingand dangerousas any the world has ever only create 20 new jobs, but it would set some of the land aside for a playground for the town. What is the effect and be accepted as currency in 11 Western European countries. At that point in time, all countries adopting the
known. . . . The notions of the great economists were world-shaking, and their mistakes nothing short of calamitous. trade-off involved in the choice that the town must make? 6. Activities done for others for a fee, such as veterinary care, are called euro must start to withdraw their old coins and notes from the market and issue euro coins and notes to the public.
1. Who wrote this excerpt? . After July 1 of that year, the old coins will no longer be accepted, although banks will continue to exchange national
money for euros.
3. In the table below, list the four factors of production. For each factor, write a question that the town might ask
before making its decision. The first one has been done as an example.
7. is the ability of risk-taking individuals to
2. What is the purpose of the reading from which the excerpt is taken?
start new businesses.
Factor of Production Question
Land Do the children in the town need a playground? 8. Any use of land, labor, and capital that produces goods and services more efficiently is called
3. What is the general subject of the excerpt?

.
1980 2005
9. When people use their resources in one way and not another, they are forced to make
4. Underline the sentence that best sums up the main idea of the excerpt. - .
5. Restate at least three additional details from the excerpt that support the main idea.
10. The value of the next best alternative that has to be given up to do an action that is chosen is known as
.
11. Economists formulate theories called .
12. A is an educated guess.
Hidden term
2A
CHAPTER
1 Resource Manager

Assessment and Evaluation
Chapter 1 Test Form A Chapter 1 Test Form B Performance Assessment

Activity 1 ExamView Pro Testmaker
Name Date Class Name Date Class
Name Date Class
1, A 1, B
1
W HAT ISName
ECONOMICS? Date Class SCORE W HAT IS ECONOMICS? Name Date Class SCORE
S CARCITY RUBRICS
USING KEY TERMS 1, A USING KEY TERMS 1, B
BACKGROUND OBJECTIVES group work, oral
Matching: Match each item in Column A with the items in Column B. Write the correct We cannot have everything we want because After completing this activity, students will presentation,
society does not have the resources to pro- be able to self-assessment
15. Which of the following does not describe what economists do? letters in the blanks. 14. All the combinations of goods and services that can be produced in a given time with a fixed amount of
duce everything people want. The problem of
A B
a. create economic models b. use factors of production to produce goods
A
resources are called
B dealing with scarcity involves making choices.
Demonstrate understanding of the basic
economic questions facing every nations
c. study the economy d. formulate theories about how the economy a. factors of production. b. costs of production. economic system.
1. economics a. the amount of output that results from a given level of inputs MATERIALS
works 1. scarcity c. opportunity costs. d. to
a. sacrificing one good or service production
purchase possibilities.
or produce Apply the factors of production to a given
b. a situation in which people do not have enough resources to Play-Doh, colored construction paper, white
2. labor
satisfy every desire 15. Entrepreneurship refers toanother
the ability to production process.
2. productivity typing paper, ink pens, marking pens, drinking
CRITICAL THINKING QUESTIONS b. a graph showing the maximum combination of goods and
a. manage other people. Demonstrate understanding of want
3. goods c. land, labor, and capital services that can be produced from a fixed amount of straws, and stick pins; any table or space large
(demand) versus needs (scarcity).
3. trade-off b. adapt technology efficiently. enough to hold the products that students
d. the study of how individuals, families, businesses, and societies resources Discriminate among the various economic
4. capital Directions: Answer each of the following sets of questions on a separate sheet of paper. c. start new businesses, introduce new products and processes, and improve management techniques. will produce
use limited resources to fulfill their unlimited wants 4. hypothesis c. the production and distribution of goods and services in a models of traditional, command, and mixed
16.production
Understanding Causee.andactivities
Effect doneExplain d. borrow capital successfully and expand an existing business to meet customer demand.
5. factors of for why
a feeproductivity rises when capital is increased. society market economies.
5. factors of production
17. Making Comparisons f. Explain the difference
a simplified betweenofthe
representation theconcepts of scarcity and shortage.
real world d. a theory or simplified representation that helps explain and
6. productivity
g. manufactured goods used to make other goods and services 6. economyCRITICAL THINKING QUESTIONS predict economic behavior in the real world PROCEDURE
7. entrepreneurship
APPLYING SKILLS h. the work people do e. the ability of risk taking individuals to develop new products
7. production possibilities
Directions: curve each of the following sets of questions on a separate sheet of paper.
Answer and start new businesses in order to make profits 1. Organize the class into groups of three and hand out Play-Doh in varying amounts to each group.
8. scarcity i. the ability of individuals to start new businesses, introduce
Using Charts and Tables: Study new
the chart andand
products answer the questions
processes, below.
and improve management
16. Finding the Main Ideaf. What
8. entrepreneurship the iscondition
the difference
of not between scarcity
being able andallshortage?
to have of the goods and 2. Give students the following directions:
9. services techniques 17. Formulating Questions How services
might one
youwants
test the hypothesis that teenagers might be reluctant to purchase You are to create an original product.
Production Possibilities for the High-Fidelity Equipment Company 9. economic model g. was
land, labor,
j. tangible items that people buy an item of clothing if its price very low?capital, and entrepreneurship used to produce Do not create products that will not sell.
10. economic model goods and services
Number of Number of 10. capital Your products will be shown to the class.
Digital Televisions Stereo Systems APPLYING SKILLS h. manufactured goods used to make other goods and services You will put a name and price on your product that you will share with the class.
RECALLING FACTS AND IDEAS i.
an assumption involving two or more variables that must be You will fill out a form given to you.
2,000 10,000
tested
Using Charts and Tables: Study the for validity
table and answer the questions below. Watch students make products. Praise some. Tell others to work harder (even if they are working).
2,100
Multiple Choice: In the blank at the left, write the letter of the choice that best9,500
completes j. the amount of output that results from a given level of inputs
the statement or answers the question. 3. Hand out a form that asks their name, name of product, name of company they are working for, price of
2,200 9,000 Production Possibilities for the High-Fidelity Equipment Company
product, what tools they used to make the product, and how long it took them to make the product.
11. Factors of production include which of the following?2,300 8,500 RECALLING FACTS AND IDEAS Number of Number of
4. Debrief the class:
a. land, labor, and capital b. technology products and entrepreneurship Digital Televisions Stereo Systems
c. goods d. all of the What is Play-Doh? (a resource)
18.and services
How many digital television sets does High-Fidelity products
have produced
to trade-off in an economy
if it wants to produce another 500 stereo Multiple Choice: In the blank at the left, write the letter of the choice that best
2,000 completes
10,000

the statement or answers the question. Did some get more Play-Doh than others?
12. The value of systems?
the next best alternative that has to be given up for the action that is chosen is the
2,100 9,500 Did you share (trade) the Play-Doh you had available?
19.of Could
a. factor High-Fidelity produce 2,000 digitalb.televisions
production. trade-off.and 9,500 stereo systems? 11. A car used by a messenger service is a type of
2,200 9,000 Did you ask others to share (trade) their Play-Doh with you?
c. opportunity
20. Why cost. d. productivity.
is it impossible for High-Fidelity to produce 2,300 digital television sets and 10,000 stereo systems? a. capital. b. labor.
Use these questions as the basis for a discussion focusing on the scarcity of resources. There are simply not
c. trade-off. 2,300
d. opportunity cost. 8,500

13. A companys office buildings are an example of enough resources to go around.

a. capital. b. labor. 12. Businesses can make decisions about the best use of their resources by analyzing
18. How many stereo systems can High-Fidelity produce if it produces just 2,000 digital television sets? 5. Have students go to the front of the room to show their products, and give the name of the product and the
c. land. d. factors of production. a. economic pricing models. b. production possibilities. price. When they are finished demonstrating their product, have them hold their product up for inspection, then
14. Economists build economic models 19. Whypolicies.
c. government does the production of the number d.of stereo systems decline
generalizations as the production
about consumer behavior.of the number of television place the product on the display area and sit down.
sets rises?
a. to describe how a business should combine the factors of production to produce goods. 13. Economics is primarily concerned with which of the following? 6. Conclude the activity by asking: What has this activity taught you about the availability of resources?
b. to help analyze the way the world works. 20.costs
a. future What would High-Fidelity need to do to produce
of goods b. values3,000 digital televisions
and objectives and 12,000 stereo systems?
of a society
Assessment
c. to find out how high teenage unemployment is. c. use of resources d. methods of production
d. to be able to use graphs to show how the economy works. 1. Students will create an original product and plan for its distribution.
2. Students will use a classroom self-assessment list to evaluate the invention.
ECONOMICS
Technology and Multimedia
You and your students can visit tx.ett.glencoe.com
ett.glencoe.com
Vocabulary PuzzleMaker CD-ROM the Web site companion to Economics Today and
Tomorrow. This innovative integration of electronic and
Interactive Tutor Self-Assessment Software print media offers your students a wealth of opportuni-
ExamView Pro Testmaker ties. The student text directs students to the Web site for
the following options:
NBR Economics & You Video Program (English/Spanish)
Chapter Overviews Student Web Activities
Presentation Plus!
Self-Check Quizzes Textbook Updates
Glencoe Skillbuilder Interactive Workbook CD-ROM,
Level 2 Answers are provided for you in the Web Activity
TeacherWorks CD-ROM Lesson Plan. Additional Web resources and Interactive
Puzzles are also available.
MindJogger Videoquiz Use the Glencoe Web site for additional resources.
Interactive Economics! CD-ROM All essential content is covered in the Student Edition.
Audio Program (English or Spanish)
Additional Resources
Spanish Resources
Reading for the Student
Eggert, James. What Is Economics? 4th ed. Mountain
Spanish Economic Concepts Transparency 1 View, CA: Mayfield Publishing, 1997. Explains basic con-
cepts of economics with real-world examples.
Spanish Vocabulary Activity 1
Reading for the Teacher
Spanish Reteaching Activity 1
Heilbroner, Robert L., and Lester C. Thurow. Economics
Spanish Section Quizzes for Chapter 1 Explained, 4th ed. New York: Simon & Schuster, 1998. An
authoritative review of the fundamentals of economics.
Spanish Chapter 1 Audio Program, Activity, and Test
2B
CHAPTER
1 Resource Manager

Section Resources
Reading Objectives Reproducible Resources Technology/Multimedia Resources
Section 1 Reproducible Lesson Plan 1-1 Daily Focus Transparency 1

The Basic Problem in Economics Daily Lecture Notes 1-1 Economic Concepts Transparency 1
How do wants and needs differ? Guided Reading Activity 1-1 Vocabulary PuzzleMaker CD-ROM
Why do all people face scarcity at all Reading Essentials and Study Guide 1-1
times? Interactive Tutor Self-Assessment Software
Daily Focus Activity 1 MindJogger Videoquiz
What are the four factors of
Section Quiz 1-1* NBRs Economics & You*
production?
Reinforcing Economic Skills 9 Presentation Plus!

Trade-Offs Daily Lecture Notes 1-2
Economic Concepts Transparency 2
How are trade-offs and opportunity Guided Reading Activity 1-2
costs related? Vocabulary PuzzleMaker CD-ROM
Reading Essentials and Study Guide 1-2
How can societys trade-offs be shown Interactive Tutor Self-Assessment Software
Daily Focus Activity 2
on a production possibilities curve? MindJogger Videoquiz
Section Quiz 1-2*
Interactive Economics!
Presentation Plus!

What Do Economists Do? Daily Lecture Notes 1-3 Vocabulary PuzzleMaker CD-ROM
How do economists use models to Guided Reading Activity 1-3 Interactive Tutor Self-Assessment Software
study the real world? Reading Essentials and Study Guide 1-3 MindJogger Videoquiz
Why are there different schools of eco-
Daily Focus Activity 3 Presentation Plus!
nomic thought?
Section Quiz 1-3* ExamView Pro Testmaker
*Also available in Spanish
Blackline Master Software Videodisc Videocassette

Transparency CD-ROM Audiocassette
2C
CHAPTER
1 Resource Manager

ACTIVITY Timesaving Tools

From the Classroom of
Charles Erlandson
All Saints Episcopal School
Tyler, Texas
The Scarcity of Time

Interactive Teacher Edition Access your Teacher
Wraparound Edition and your classroom resources
Time is a very precious resource. To help students grasp with a few easy clicks.
the concept of time as a scarce resource, have them keep Interactive Lesson Planner Planning has never been easier!
Organize your week, month, semester, or year with all the lesson
a one-week log of how all their hours (168) are spent in one
week. Ask students to divide these hours into categories helps you need to make teaching creative, timely, and relevant.
such as sleep, school, studying, eating, entertainment,
travel, preparation, shopping, and so on. Then have stu- Use Glencoes Presentation Plus! multimedia
dents enter the information in a database and convert it into teacher tool to easily present dynamic lessons
a circle graph. Students should compare their graphs. that visually excite your students. Using Microsoft
ECON: 5A, 23F, 23G PowerPoint you can customize the presenta-
tions to create your own personalized lessons.
Key to Ability Levels

Block Schedule
Teaching strategies have been coded for varying
Activities that are particularly suited to use within the block learning styles and abilities.
scheduling framework are identified throughout this chapter L1 BASIC activities for all students
by the following designation: BLOCK SCHEDULING L2 AVERAGE activities for average to above-average
students
L3 CHALLENGING activities for above-average students
ELL ENGLISH LANGUAGE LEARNER activities
Voluntary Standards Emphasized in Chapter 1 Resources Available from NCEE

Content Standard 1 Students will understand that pro- Capstone: The Nations High School Economics Course
ductive resources are limited. Therefore, people cannot have MCGEconomics and Entrepreneurship
all the goods and services they want; as a result, they must Focus: High School Economics
choose some things and give up others. Personal Decision Making: Focus on Economics
Content Standard 2 Students will understand that effec- To order these materials, or to contact your State
tive decision making requires comparing the additional costs Council on Economic Education about workshops and
of alternatives with the additional benefits. Most choices programs, call 1-800-338-1192 or visit the NCEE Web site
involve doing a little more or a little less of something; few at http://www.nationalcouncil.org
choices are all-or-nothing decisions.
2D
Introducing
CHAPTER 1
ECONOMICS
& YOU
What Is Economics?
!77B6" Chapter 2
Disc 1, Side 1
Why Its Important
ASK: If an item that everyone
needs is scarce, how can it be
How do scarce resources
allocated? Answers may include including timeaffect you
through rationing programs. and everyone around you?
Also available in VHS.
How do economists simplify the
world to help us better understand
it? This chapter will explain what
economics is, and how it is part of
Chapter Overview your daily life.
Economics is the study of how
individuals and nations make To learn more
choices about how to fulfill their about scarcity
wants. Chapter 1 explains or and how it
describes scarcity, the four factors forces you to
of production, the relationship make choices, view the
between trade-offs and opportunity Economics & You Chapter 2
costs, and how economists use eco- video lesson: What Is
nomic data to test the economic Economics?
models they formulate.
Use MindJogger
Videoquiz to preview Chapter 1
content.
Chapter Overview Visit the
Economics Today and Tomorrow Web
site at tx.ett.glencoe.com and click on
Chapter 1 Chapter Overviews
to preview chapter information.
Introduce students to chapter

content and key terms by having
them access Chapter 1Chapter CHAPTER LAUNCH ACTIVITY
Overviews at tx.ett.glencoe.com Ask students to imagine that they have $100 to spend. Have them make a list of
the items they would like to buy and the approximate price of each. Have them add
up the prices and, if the total exceeds $100, remove items so that they do not exceed
their budget. Lead students in a discussion of their choices and the thought process
that led them to those choices. Conclude by pointing out that choice is a key concept
in economics. ECON: 1A, 5A, 23A, 23G, 24A, 25A-B
2
CHAPTER 1
SECTION
SECTION 1,
1, Pages
Pages 38
38
1
Overview
Section 1 explains or describes
the importance of economics, the
relationship of scarcity to unlimited
wants, and the four factors of pro-
duction.
READERS GUIDE
Terms to Know
economics BELLRINGER
THE COLUMBUS DISPATCH, MARCH 23, 1999 Motivational Activity
scarcity
When 5-year-old Michael factors of production
land Project Daily Focus
Badurina spied a classmate
labor Transparency 1 and have
wearing Blues Clues clothes,
goods students answer the questions.
he implored a higher power, services
Mommy, I want some of Available as blackline master.
capital
those! I need some of those! productivity
Daily Focus Transparency 1
. . . For the uninitiated, entrepreneurship
Blues Clues is the most- technology
1
watched preschool TV pro- Reading Objectives
2. The photograph of the housing development represents unlimited wants.

1. The photograph of the redwood forest represents the limited resource.
gram in the United States, T HE BASIC ECONOMIC PROBLEM: SCARCITY
1. How do wants and needs
with 14 million viewers each differ?
week. 2. Why does scarcity face all
people at all times?
3. What are the four factors of
Answers
production?
The Stock Market Robert A. Jurei
S tarting at a very young age, many Americans use the words

want and need interchangeably. How often do you think
about what you want? How many times have you said that
you need something? When you say, I need some new clothes,
are you stating a want, or a real need? As you read this section,
The Stock Market David Barnes
1. Which photograph represents a limited resource?

2. Which photograph represents unlimited wants?
youll find that economics deals with questions such as these. economics: the study of how Daily Focus Transparencies
What, exactly, is economics? Economics is the study of how individuals and societies make
choices about ways to use scarce
individuals, families, businesses, and societies use limited resources to fulfill their needs
resources to fulfill their unlimited wants. and wants READERS GUIDE
What Is Economics? 3
Answers to the Reading Objectives
questions are on page 8.
Preteaching Vocabulary
Vocabulary PuzzleMaker
SECTION 1 RESOURCE MANAGER
Reproducible Masters Multimedia
Reproducible Lesson Plan 11 Daily Focus Transparency 1
Reading Essentials and Study Guide 11 Economic Concepts Transparency 1
Guided Reading Activity 11 Vocabulary PuzzleMaker CD-ROM
Section Quiz 11 Interactive Tutor Self-Assessment Software
Daily Focus Activity 1 ExamView Pro Testmaker
Daily Lecture Notes 11 MindJogger Videoquiz Student Edition TEKS
NBRs Economics & You
Presentation Plus! Page 3: 4A-B, 5A, 19D, 23A, 24A
3
CHAPTER 1 ZITS
Reprinted with special permission of King Features Syndicate.

SECTION
SECTION 1,
1, Pages
Pages 38
38
Guided Practice
L1 Understanding Ideas Write the
following statements on the board
for students to complete:
Things I need to live include... Wants Versus Needs
1.1
Things I want to have include... Typically the term need is used very casually. When most peo-
ple use the word, as shown in Figure 1.1, they really mean that
Call on volunteers to read their Wants Versus Needs they want something they do not have. Obviously, everyone needs
completed statements to the class. Luxuries such as concert tickets
certain things to survivefood, clothing, and shelter. Americans
often become necessities in the
Then have students discuss how also consider education and health care as needs.
eyes of consumers. How do con-
they distinguished between what sumers satisfy their seemingly To economists, however, everything other than basic survival
they need and what they want. unlimited wants? needs is considered a want. People want such items as new cars and
Conclude by having students con- personal computers. What begins as a luxury, or want, becomes to
sider how their views on needs many people a necessity.
and wants compare with those of So how do individuals satisfy their unlimited wants in a world
economists. ECON: 5A, 21A of limited resources? They must do this by making choices.
Daily Lecture Notes 11
1-1
L ECTURE LAUNCHER
In 1901, people discovered oil in Texasbut they were actually looking for water!
Disappointed, they offered to trade the oil for water at a ratio of 1:1 (one barrel of oil for
each barrel of water). Which is a more primary need, oil or water? What is the difference
between a need and a want?
PAGE 4
I. Wants Versus Needs
A. People use need and want interchangeably.
1.2
B. Wants are anything other than what is needed for basic survival.
C. Needs are things required for basic survival (food, clothing, shelter).
Discussion Question
How can you determine whether or not something is truly a need? How can needs
be confused with wants? (Needs are few and basic: food, clothing, and shelter. Designer
Economic Choices
jeans and expensive shoes are not needs. Students should consider what might happen if the
need/want is not met. )
Everyone, including govern-
PAGE 5 ments, must make choices in
II. Choices
A. Spending decisions involve choices.
a world of limited resources.
If the government allocates
funds to build Stealth bombers,
then funds for higher education
could be limited. What is the
basic economic problem that
makes choices necessary?
Answer: by making choices
Answer: scarcity Meeting Special Needs

Reading Disability Students with various reading and information organization difficul-
ties may have problems relating pictures, captions, and the main text. Before they read the
text in Section 1, ask students to look at the pictures and read the captions. Have students
discuss what the pictures illustrate. Then have students read Section 1. Ask them to
explain again what the pictures illustrate and have them suggest why they think the pic-
tures were included in this section. ECON: 23A, 23D
Refer to Inclusion for the Social Studies Classroom Strategies and Activities for
students with different learning styles.
4
CHAPTER 1
Choices SECTION
SECTION 1,
1, Pages
Pages 38
38
As a student, you probably have a small income from an
allowance or a part-time job. As a result, you have to make
choices about its use. Whenever you make such a spending deci- Guided Reading Activity 11
sion, each available choice competes with every other available Name Date Class
choice. Suppose you have $20.00 to spend. When you decide 1-1
whether to spend your money on lunch or clothes or a new CD, For use with textbook pages 28
you are making an economic choice. T HE BASIC PROBLEM IN ECONOMICS
Like individuals, businesses must also make choices. RECALLING THE FACTS
Directions: Use the information in your textbook to fill in the blanks using the words in the box. Some
Businesspeople make decisions daily about what to produce now, words may be used more than once.
factors of production economics scarcity
what to produce later, and what to stop producing. These deci- resources
goods
services
land
want
capital
technology
labor
entrepreneurship
sions in turn affect workers incomes and peoples ability to buy.

Introduction
Societies, too, face choices about how to utilize their resources in 1 __________________________ is the study of how individuals, families, businesses, and societies use limited
2 __________________________ to fulfill their unlimited wants.
the production of goods and services. As shown in Figure 1.2, Wants Versus Needs
Economists consider everything other than basic survival needs to be a 3 __________________________. This includes
TVs, VCRs, computers, and automobiles.
elected government representatives in the United States must Choices/The Problem of Scarcity
People, businesses, and societies make choices that utilize resources and affect the production of
4 __________________________ and 5 __________________________. However, there exists a problem of
decide how much to spend on defense (Stealth bombers) versus 6 __________________________, in which people do not have enough income, time, and other resources to satisfy
higher education, for example. How people and societies make

these choices is the focus of economics. L2 Analyzing Ideas Lead the class
in a discussion of what life would be
like if no economic scarcity existed.
The Problem of Scarcity Note ideas on the board as students
The need to make choices arises because everything that exists
offer them. Then ask students to use
is limited, although some items (such as trees in a large forest)
the information on the board to
may appear to be in abundant supply. At any single moment, a
write a paragraph that begins: If
fixed amount of resources is available. At the same time, people
there were no economic scarcity...
have competing uses for these resources. This situation results in ECON: 5A, 23A, 23D, 24D
scarcitythe basic problem of economics.
Scarcity means that people do not have and cannot have scarcity: condition of not being
able to have all of the goods and
Project Economic Concepts
enough income, time, and other resources to satisfy their every
services one wants, because Transparency 1 and have students
want. What you buy as a student is limited by the amount of wants exceed what can be made
discuss the accompanying questions.
income you have. In this case, your income is the scarce resource. from all available resources at
any given time
Even if everyone in the world were rich, however, scarcity would
continue to existin the form of time. Even the richest person
does not have unlimited time.
ECONOMICS
It is important not to confuse scarcity with shortages. Scarcity
& YOU
always exists because of competing alternative uses for resources,
whereas shortages are temporary. Shortages often occur, for exam- What Is Economics?
ple, after hurricanes or floods destroy goods and property.
!77B6" Chapter 2
Disc 1, Side 1
Factors of Production ASK: What is economic
When economists talk about scarce resources, they are refer- factors of production:
scarcity? It is a situation that
resources of land, labor, capital,
ring to the factors of production, or resources needed to pro- and entrepreneurship used to occurs because resources are
duce goods and services. Traditionally, economists have classified produce goods and services not sufficient to satisfy total
demand for them.
Also available in VHS.
Cooperative Learning
Organize students into small groups, and ask groups to create storyboards for a short
television commercial designed to encourage the study of economics in schools. Mention
that in their commercials, groups should explain what economics is, demonstrate the sub-
jects relevance to everyday life, and explain how knowledge of the subject might help
people. Encourage groups to share their storyboards with the rest of the class. If video
equipment is available, some groups may wish to shoot their commercials. Student Edition TEKS
BLOCK SCHEDULING ECON: 4A, 23A, 23D, 24A, 24C-D Page 4: 5A, 21A-B, 23A, 24A, 25B
Page 5: 1B, 2B, 5A, 21A, 24A, 25B
5
CHAPTER 1
these productive resources as land, labor, capital, and entrepre-
SECTION
SECTION 1,
1, Pages
Pages 38
38
neurship. Figure 1.3 shows you the four factors of production.
land: natural resources and sur- Land As an economic term, land refers to natural resources pres-
Independent face land and water ent without human intervention. Land includes actual surface
Practice land and water, as well as fish, animals, forests, mineral deposits,
and other gifts of nature.
L1 Creating Posters Ask each stu-
dent to select one of the following labor: human effort directed Labor The work people do is laborwhich is often called a
subjects: Economic Needs/Economic toward producing goods and human resource. Labor includes anyone who works to produce
services
Wants, Scarcity, or Factors of Pro- goods and services. As you know, economic goods are tangible
duction. Then ask students to create goods: tangible objects that can items that people buy, such as pharmaceuticals, shampoo, or com-
a poster for their selected subject. satisfy peoples wants puters. Services are activities done for others for a fee. Doctors,
Tell students that their posters hair stylists, and Web-page designers all sell their services.
services: actions that can satisfy
should be designed as visual aids for peoples wants
teaching the content of Section 1. Capital Another factor of production is capitalthe manu-
Display finished posters around the capital: previously manufactured factured goods used to make other goods and services. The
classroom. BLOCK SCHEDULING
goods used to make other goods machines, buildings, and tools used to assemble automobiles, for
and services
example, are capital goods. The newly assembled goods are not
ECON: 4A, 5A, 24A, 24D
considered capital unless they, in turn, produce other goods and
services, such as an automobile performing services as a taxicab.
Factors of Production 1.3

Economic development in
developing countries, as in devel-
oped countries, is linked to the The Four Factors of Production The four general cate-
gories of resources needed in the production of all goods and serv- B Labor
factors of production. Many econ- This child-care worker falls
ices include land, labor, capital, and entrepreneurship.
omists believe that the biggest under the category of labor
obstacle to economic growth in she is performing a service
developing countries is the quality A Land for a fee.
of labor. With low literacy rates Natural resources, such as timber, are
all the things found in natureon or
and poor health conditions, labor
in water and the earth.
forces in developing countries do
not have the skills needed to keep
up with modern technology.
ECON: 5A, 10B, 22A, 26A
Have students study Figure 1.3.

Then have them consider which, if
any, of the four factors of produc- 6
tion is the most important. Ask
students to explain their answers.
ECON: 23A, 23D
Free Enterprise Activity

Goods and Services Organize students into several small groups, and assign each
group the category of goods or services. Ask groups to locate a business in their commu-
nity that provides their category. Have students evaluate the significance of the location of
the business they chose. Then have them research examples of the four factors of pro-
duction used by their selected business. Have groups present their findings in chart form.
BLOCK SCHEDULING ECON: 12B, 23A, 23F, 24D
6
CHAPTER 1
When capital is combined with land and labor, the value of all
SECTION
SECTION 1,
1, Pages
Pages 38
38
three factors of production increases. Think about the following
situation. If you combine an uncut diamond (land), a diamond
cutter (labor), and a diamond-cutting machine (capital), you end
up with a highly valued gem.
Capital also increases productivitythe ability to produce productivity: the amount of out-
greater quantities of goods and services in better and faster ways. put (goods and services) that
results from a given level of
Consider how much faster a mechanical reapera capital good inputs (land, labor, capital) Meeting Lesson
can harvest grain than a person clearing the field with a scythe. Objectives
Entrepreneurship The fourth factor of production is Assign Section 1 Assessment as
entrepreneurship. This refers to the ability of individuals to start entrepreneurship: ability of risk-
homework or an in-class activity.
new businesses, to introduce new products and processes, and to taking individuals to develop new Use Interactive Tutor Self-
products and start new busi-
improve management techniques. Entrepreneurship involves ini- nesses in order to make profits Assessment Software to review
tiative and willingness to take risks in order to reap profits. Section 1.
Entrepreneurs must also incur the costs of failed efforts. About
30 percent of new business enterprises fail. Of the 70 percent
that do survive, only a few become wildly successful businesses Section Quiz 11
such as Microsoft, The Limited, or Blockbuster Video. Name Date Class
1, 1
Technology Some economists add technology to the list of fac- T HE BASIC PROBLEM IN ECONOMICS SCORE
tors of production. In the past, technology included any use of technology: advance in Matching: Place a letter from Column B in the blank in Column A. (10 points each)
A B
land, labor, and capital that produced goods and services more knowledge leading to new and 1. economics a. human effort directed toward producing goods and
improved goods and services and 2. labor

services
efficiently. For example, a computer keyboard was a technological better ways of producing them 3. goods
b.
c.
previously manufactured goods used to make other
goods and services
the study of how individuals and societies make
4. capital choices about ways to use scarce resources to fulfill
advance over the typewriter. 5. technology
d.
their needs and wants
advance in knowledge leading to new and improved
goods and services and better ways of producing
them
e. tangible objects that can satisfy peoples wants
Multiple Choice: In the blank at the left, write the letter of the choice that best com-
pletes the statement or answers the question. (10 points each)
6. The need to make choices arises because
D Entrepreneurship a. some things are not limited.
c. everything that exists is limited.
b. shortages are a constant situation.
d. people need to share their resources.
These entrepreneurs are taking a 7. The basic problem of economics is

a. scarcity. b. shortages.
financial risk to make a profit for

themselves and to bring innovative
products and services to consumers. Reteach
Have students copy the headings
in Section 1 as the main headings
of an outline. Then ask them to
complete the outline by adding sec-
ondary headings and details.
ECON: 23A
C Capital
Capital goods, such as these robots,
are unique in that they are the result
of previous manufacturing.
7
Critical Thinking Activity

Analyzing Information Organize students into several small groups. Have group mem-
bers brainstorm a list of the activities they pursue after schoolincluding homeworkin a
typical week. Then ask them to create a five-day schedule for six hours of activities after
school. Have group representatives present and explain their schedules to the class.
Conclude by asking students to discuss the problems they faced in developing their
schedules and how those problems are similar to the economic problems of scarcity. Student Edition TEKS
ECON: 5A, 23D, 24C-D Page 6: 5A, 10A, 12B, 19D, 24A
Page 7: 5A, 10A, 19D, 24A, 26A
7
CHAPTER 1
SECTION
SECTION 1,
1, Pages
Pages 38
38
Economic Connection to... Technology
Technology Saves You a Trip to the Store
Economic Connection
to... Technology O nly a few years ago, computers were
as big as refrigerators. Now, Frigidaire
Home Products has unveiled a fridge that
even a jack for an Internet connection. After
emptying a carton of milk, you could swipe
the carton past the bar code scanner, tap a
contains a computer. The computer has a couple of buttons on the screen, and the
Smart labels may one day,
touch-screen monitor and a bar code scan- fridge would order replacements from an
replace the bar codes that you
ner mounted on the freezer door. Theres online grocery store.
see on items you buy at the store.
These labels contain a computer
chip, which can carry a wealth of
information. And new data can be
Today, technology usually describes the use of science to
added even after the label has
develop new products and new methods for producing and
been attached to a package. Also, distributing goods and services. Without satellite technology,
because the chip communicates for example, it would be impossible for you to see real-time
by radio waves, the label does not events happening on the other side of the world. Without
have to be held directly in front of Internet technology, you could not
a scanner to be read. The radio e-mail a friend 8,000 miles away
waves can even penetrate dirt or for the price of a local phone call. Practice and assess
other grime that might cover the key skills with
Skillbuilder Interactive
label. The one disadvantage to Workbook, Level 2.
this new technology is cost
about 30 per label.
ECON: 26A, 26D
1
Reading Essentials and Understanding Key Terms Factor of Production Example 1 Example 2
Study Guide 11
1. Define economics, scarcity, factors of produc-
Name Date Class
tion, land, labor, goods, services, capital, pro-
1, 1 ductivity, entrepreneurship, technology.
For use with textbook pages 38
T HE BASIC PROBLEM IN ECONONICS

Reviewing Objectives Applying Economic Concepts
KEY TERMS
economics The study of how people make choices about ways to use limited resources to satisfy their
wants and needs (page 3) 2. What is the difference between wants and 5. Factors of Production Describe a situation
scarcity The condition that occurs when wants are greater than the resources to satisfy them (page 5)
factors of production The resources of land, labor, capital, and entrepreneurship that are used to produce needs? in which a capital good has improved your per-
goods and services (page 6)
land The economic term for surface land and water and the natural resources that each contains (page 6)
labor The human effort that is required to produce goods and services (page 6)
sonal productivity.
goods Material objects that satisfy peoples wants or needs (page 6)
services Actions or activities that satisfy peoples wants or needs (page 6)
3. Explain why scarcity and choice are basic prob-
capital Manufactured goods that are used to produce other goods or services (page 6)
productivity The amount of goods and services that results from the use of a set amount of land, labor,
and capital (page 7)
lems of economics. Critical Thinking Activity
entrepreneurship Ability of risk-taking individuals to start new businesses or develop new products and
processes in hopes of making profits (page 7)
technology Advances in knowledge that lead to new and improved goods and services and better ways of
producing them (page 8)
4. Graphic Organizer Create a chart like the 6. Summarizing Information Use a search
one shown in the next column, then list the four engine to research an entrepreneur from the
DRAWING FROM EXPERIENCE
factors of production and provide two examples past or present, such as Andrew Carnegie,
At one time or another, you have probably been required to do a project for your science, social
of each. Mary Kay Ash, or Bill Gates. Explain what
benefits were brought to society by his or her
risk-taking entrepreneurship.
Have students write a paragraph 8 CHAPTER 1
using the following as a topic sen-

tence: Everyone makes economic
choices. ECON: 4A, 5A, 23A, 23D,
24B, 25B
1. All definitions can be found in the Glossary. Capitalassembly lines, factories, wrenches,
2. Needs are basic to survival. Wants are things etc.; Entrepreneurshipmanagers, business
other than these basic needs. owners, etc.
3. Scarcity: there are not enough resources to 5. Examples should explain how a capital good
satisfy everyones wants; Choice: everything has improved students productivity.
that exists is limited. 6. Answers should reflect an entrepreneur and
4. Landwater, fish, mineral deposits, etc.; the contributions that he or she brought to
Laborfactory worker, painter, doctor, etc.; society.
8
Critical
Critical Thinking Skills Thinking Skills
Sequencing and Sequencing and

Categorizing Information
Categorizing Information Discuss the guidelines for
sequencing and categorizing noted
Sequencing involves placing facts in the order in which they occurred. Categorizing entails organizing
in the Learning the Skill section.
information into groups of related facts and ideas. Both actions help you deal with large quantities of Then point out that the following
information in an understandable way. simple equation will help students
distinguish between the two skills:
Look for dates or clue Learning the Skill Sequence = Time
words that provide you To learn sequencing and categorizing skills, follow Category = Similar Ideas and
with a chronological Facts
order: in 2004, the late
the steps listed on the left.
1990s, first, then, finally, On the left side of the board,
after the Great Practicing the Skill under the heading Sequence, list
Depression, and so on. the numbers 1 though 4. On the
Read the passage below, then answer the questions
If the information youre that follow. right side of the board, under the
studying did not happen heading Categorize, create a chart
in a sequential order, you
may categorize it instead. Twinkies were invented in 1930 by James A.
Dewar, a plant manager for Continental Baking
with Land, Labor, Capital, and
Entrepreneurship as column
To do so, look for infor-
mation with similar Company. Faced with economic hardship, it didnt headings. Call on volunteers to
characteristics. make sense to Dewar that the bakery had lots of complete the list and chart.
List these characteristics,
expensive pans dedicated to a product called Little ECON: 23A, 23F, 24A
or categories, as the head- Short Cake Fingers that was baked only six weeks a
Reinforcing Economic Skills 9
ings on a chart. yearduring strawberry season. Dewar thought the Name Date Class
As you read, fill in details little cakes could sell year-round if the company came 9
under the proper category up with something to replace the strawberry cream S EQUENCING AND CATEGORIZING INFORMATION
on the chart. placed inside. He mixed up a banana-flavored Sequencing involves placing facts in the order in which they occurred. Categorizing involves
organizing information into groups of related facts and ideas. Both actions help you deal with
large quantities of information in a manageable way.
crme and figured out a way to inject it into the Directions: Read the following paragraphs and create a timeline that correctly sequences the events
described. Then on a separate sheet of paper, categorize the information in the paragraphs into events that
occurred before the euro was introduced and events that will occur after the euro is introduced.
shortcake using three syringe-like injection tubes.

Adapted from Jack Mingos How the Cadillac Got Its Fins,
HarperCollins, 1994
On January 1, 1999, citizens of the 11 European nations woke up to a new currency. The European Monetary Union
(EMU) had been the subject of heated discussion ever since it was conceived in the 1980s by German Chancellor
Helmut Kohl of Germany, French President Franois Mitterand, and the President of the European Commission,
Jacques Delors. At the stroke of midnight on December 31, 1998, the euro came into being in all participating
countries. The national currencies were turned into subdivisions of the euro according to the fixed euro conversion
rate, which was set on that day. The countries participating in the monetary union agreed to do so when they signed
the Treaty of Maastricht in 1992.
The changes brought about by the adoption of the new European currency, are not immediately obvious to the public.
The old national coins and notes will continue to be legal tender until July 1, 2002. On that date, the euro will go into
effect and be accepted as currency in 11 Western European countries. At that point in time, all countries adopting the
1. How can the facts here be organized sequentially? euro must start to withdraw their old coins and notes from the market and issue euro coins and notes to the public.
After July 1 of that year, the old coins will no longer be accepted, although banks will continue to exchange national
money for euros.
2. Now organize the facts under the categories of Land,

Labor, Capital, and Entrepreneurship.
Practice and assess Application Activity

key skills with
Skillbuilder Interactive
Find a newspaper or magazine article about a local
Workbook, Level 2. business. Sequence or categorize the information in a
chart. Glencoe Skillbuilder
What Is Economics? 9 Interactive Workbook,
Level 2
Answers to Practicing the Skill

1. Answers may be similar to the following: (1) Twinkies invented in 1930. (2) Dewar
thought it wasteful to use expensive shortcake pans for only 6 weeks during the
strawberry season. (3) Decided to utilize cake pans for another type of cake. (4)
Dewar developed a banana filling and worked out a way to inject it into the cakes.
2. Land Labor Capital Entrepreneurship Student Edition TEKS
strawberries, plant bakery; expensive cake pans; Dewars decision to find a way to use the
bananas manager syringe-like injection tubes expensive cake tins all year round; the switch Page 8: 4A-B, 5A, 10A, 19D, 23A,
from strawberry filling to banana filling 23D, 23F, 24A, 26A, 26D
Application Activity Note cards or charts will vary. Page 9: 19D, 23A, 23F, 24D
9
Pencils An International Product As youve learned, the land factor of
production includes natural resources. The natural resources that make up a pencil come from all over
Hold up a pencil and tell stu-
the world. So a pencilyes, the simple writing tool you hold in your handis an international product.
dents the following points:
Americans use about 2.8 billion
pencils every year.
The average pencil can draw a Manufacturers
line 35 miles long or write The Eberhard Faber Division makes its
about 45,000 words. pencils in Lewisburg, Tennessee. The com-
Then point out that in this fea- pany produces almost a billion pencils
ture, students will discover that this every year. The J.R. Moon Pencil Company
is also located in Lewisburg.
simple writing tool is a little more
complex than they think.
The Lead
The lead in a pencil is not really lead at all.
Before students read this feature, Its a mixture of graphite and clay. The best
ask them to identify the materials graphite comes from Sri Lanka, Madagascar,
that are used to make pencils. List and Mexico. Many pencil makers prefer the
student responses on the board. graphite from Mexico because it makes the
When they think they have named blackest marks. Clay comes from Germany
all the materials, draw a line under and Georgia.
the list. Then have students identify The Casing
the countries of origin of these pen- The casing (material around the lead) of
cil components. List the appropri- most wooden pencils is made from incense
ate country next to each pencil cedar. Most of this cedar comes from the
component. Ask students to copy High Sierras in California, but some of it
these lists into their notebooks. As comes from Oregon and Washington.
they read the feature, ask students
to add to or subtract from these
original lists. ECON: 12B, 23A
Wax
Wax from Brazil coats the lead and soaks
into the wood. The wax on the lead helps the
pencil write more smoothly. Wax in the wood
makes the wood easier to run through the
The island nation of Sri Lanka, machines at the factory and also makes the
located just off the southeastern finished pencil easier for you to sharpen.
coast of India, is the worlds lead-
ing producer of graphite. 10
ECON: 12B
Extending the Content

The Incense Cedar California incense cedar is the favorite wood of pencil makers all
over the world. How do timber companies in the United States ensure that there will be a
steady supply of wood for pencils? They cut the incense cedar on a sustained-yield basis.
This means that the annual growth of the incense cedar forests is greater than the amount
the timber companies cut. ECON: 2B
10
Have students answer the
Thinking Globally questions.
Yellow Pencils
Pencils were first painted yellow to
honor China, where the best graphite
came from. In China, yellow is a color of
royalty and respect.
Mention that the pencil is not
the only everyday item that pro-
vides an illustration of the global
economy. Encourage students to
The Eraser research the origins of the materials
Rubber and pumice are the key ingredients of used in another everyday itemgym
erasers. Pumice is the part that actually
shoes, for example. ECON: 12B, 23A
erasesthe rubber just holds it together. The
pumice comes from Italy, and the rubber
comes from Malaysia.
Economic Connection
to... Literature
American author John
Steinbeck, who wrote Grapes of
Wraththe classic study of life in
the United States during the
Great Depressionused as many
as 60 pencils a day.
The first rubber eraser was

Thinking Globally made in 1770. Up until that time,
the most common type of eraser
1. List all the locations that supply resources for making pencils. was bread crumbs. The first pencil
2. What are the specific resources supplied by the locations you listed in question 1? with an attached eraser was made
in 1858.
11
Answers to Thinking Globally

1. Mexico; Sri Lanka; Madagascar; Germany; Brazil; Italy; Malaysia; Georgia, California,
Washington, and Oregon, United States
2. Mexico, Sri Lanka, Madagascargraphite; Germany, Georgiaclay; California,
Washington, Oregonwood casing; Brazilwax; Italypumice; Malaysiarubber
Student Edition TEKS

Page 10: 12B, 23A, 23F
Page 11: 12B, 23A, 23F
11
CHAPTER 1
SECTION
SECTION 2,
2, Pages
Pages 1216
1216
2
READERS GUIDE
Overview Terms to Know
trade-off
Section 2 explains how the con- opportunity cost BUSINESS WEEK, FEBRUARY 15, 1999
cept of trade-offs is related to oppor- production possibilities curve If education is the key to Americas future
tunity costs and the production
Reading Objectives and the well-being of its individual
possibilities curve. ECON: 5A-B
1. How are trade-offs and citizens, the nations youthand
opportunity costs related? particularly young females
BELLRINGER 2. How can societys trade- seem to have gotten the right
Motivational Activity offs be shown on a produc- message. Over 70% of
tion possibilities curve?
female high-school grads are
Project Daily Focus enrolled in college, far more
Transparency 2 and have than the 63.5% of their male
students answer the questions. counterparts who did so.
This activity is also available
as a blackline master.
Daily Focus Transparency 2
2
A s you learned in Section 1, scarcity forces people to make
choices about how they will use their resources. In this
1. Students can spend their time working after school or studying school assignments.
2. By working, a student gains income. By studying, a student may gain better grades.
section youll learn that the effects of these choices may

When time is taken away from work, the student loses income. When time is taken
C HOICES
be long-lasting. For example, you may go to college or work full-
away from studying, the student may receive lower grades.
Production Possibilities Curve

time after graduating from high school. This decision affects not
for Time Spent Working After School
and Time Spent Studying for Economics Class only your life now, but also what youll earn in the future.
$120/F
6
Answers
Trade-Offs
$100
5
D
$80
4
D
The economic choices people make involve exchanging one

Hours spent working
$60
3
Various
Combinations
C
good or service for another. If you choose to buy a DVD player,
$40
2
B
you are exchanging your money for the right to own the player.
1
$20
A
$0/A+
trade-off: sacrificing one good or Exchanging one thing for the use of another is called a trade-off.
0
service to purchase or produce Individuals, families, businesses, and societies are forced to
1 2 3 4
Hours spent studying
5 6 7
another
1. According to the graph, in what two ways can students spend
make trade-offs every time they use their resources in one way
their time?
2. How would students benefit from spending time on each of these
and not another. Figure 1.4 shows a trade-off common to grow-
activities? How would they lose?
Daily Focus Transparencies
ing communities.
The Cost of Trade-Offs The result of a trade-off is what you

READERS GUIDE give up in order to get or do something else. Time, for example, is
Answers to the Reading Objectives 12 CHAPTER 1
questions are on page 16.
Call on volunteers to suggest
what each of the Terms to Know SECTION 2 RESOURCE MANAGER
means. Have students check these
definitions by finding the terms in Reproducible Masters Multimedia
the Glossary. ECON: 24A Reproducible Lesson Plan 12 Daily Focus Transparency 2
Vocabulary PuzzleMaker Reading Essentials and Study Guide 12 Economic Concepts Transparency 2
Guided Reading Activity 12 Vocabulary PuzzleMaker CD-ROM
Section Quiz 12 Interactive Tutor Self-Assessment Software
Daily Focus Activity 2 ExamView Pro Testmaker
Daily Lecture Notes 12 MindJogger Videoquiz
Interactive Economics!
Presentation Plus!
12
CHAPTER 1
1.4 SECTION
SECTION 2,
2, Pages
Pages 1216
1216
Trade-Offs The trade-off of maintaining a

historical community is the convenience that
modern roads would provide. How can a
trade-off you make today affect your future?
Guided Practice
L1 Applying Ideas Ask students to
list recreational or purchasing
choices they have made recently.
Then ask them to identify the oppor-
tunity cost for each of these choices.
Encourage students to share and
a scarce resourcethere are only so many hours in a dayso you
compare their lists. ECON: 5A-B,
must choose how to use it. When you decide to study economics
23A, 25B
for an hour, you are giving up any other activities you could have
chosen to do during that time. Daily Lecture Notes 12
opportunity cost: value of the
In other words, there is a cost involved next best alternative given up for
1-2
in time spent studying this book. Econo- the alternative that was chosen
mists call it an opportunity costthe L ECTURE LAUNCHER
During the 1600s, the demand for Hollands tulips became so great that prices rose to unbe-
value of the next best alternative that lievable levels. In fact, around 1610, a single tulip bulb could be given as the dowry for a
bride. What do you think the groom might have had to give up in order to offer a tulip bulb
in 1610? What do you think the trade-off would be today?
had to be given up to do the action that PAGES 1214
was chosen. You may have many trade- I. Trade-Offs

A. Exchanging one thing for the use of another is called a trade-off.
offs when you studyconnecting to your B. Trade-offs involve opportunity costs, or choosing one alternative means you lose the
Rain Forest Trade-Offs

next best.
C. Considering the opportunity cost can help people make decisions.
favorite Web site, going to the mall, or Discussion Question
Consider all the costs of choosing to play a particular fall sport. Name all the costs
practicing the guitar, for example. How do trade-offs of resources affect our future? and explain whether or not you would still choose to play. (Answers will vary. Students
should consider the amount of time and money the sport will cost them. They should also
consider their next best alternative, or opportunity cost, as they make their decision.)
But whatever you consider the single The Amazon River Basin in Brazil is the worlds largest PAGES 1415
next best alternative is the opportunity tropical rain forest and river system. But within the II. Production Possibilities Curve
cost of your studying economics for Basin an area equal to 5,000 soccer fields is being
one hour. destroyed every day. Farmers burn the forests to gain
A good way to think about opportu- farmland for other profitable crops. Loggers cut and
nity cost is to realize that when you
export the fine hardwoods for a profit. And people
make a trade-off (and you always make
have penetrated the forests to strip the Amazon of its Answer: Answers may vary. Most
trade-offs), you lose. What do you lose?
curative and medicinal plants. students probably will suggest that
You lose the ability to engage in your
next highest valued alternative, as What are the trade-offs for the future? Many scien- going to college instead of taking a
shown in Figure 1.5 on page 14. In eco- tists believe the destruction of the forest will speed up job immediately after graduating
nomics, therefore, opportunity cost is global warming. Rain forests supply one-fifth of the from high school may affect future
always an opportunity that is given up. worlds oxygen supply, as well as trap poisonous car- earning potential.
bon compounds. If the area is destroyed, its untold
Considering Opportunity Costs medicinal secrets also will be lost forever.
Being aware of trade-offs and their
resulting opportunity costs is vital in
Meeting Special Needs

Visual Learning Disability Students with visual-spatial processing problems may have
difficulty interpreting graphs. Because economic information often is presented in graph
form, it is important that students become proficient in reading and interpreting graphs.
Refer students to the production possibilities curve in Figure 1.6. Have them identify the Student Edition TEKS
vertical and horizontal axes and the units of measurement, or scales, used on these two Page 12: 4A-B, 5A-B, 23A, 24A,
axes. Then have them write a sentence summarizing the information shown on the graph. 25B
ECON: 23A, 23F, 24B Page 13: 4A-B, 5A-B, 12B, 21A,
Refer to Inclusion for the Social Studies Classroom Strategies and Activities. 22B, 23A, 23D, 24A
13
CHAPTER 1 1.5
SECTION
SECTION 2,
2, Pages
Pages 1216
1216
Opportunity Cost Any time you pay money to

purchase a good or service, you lose the opportunity
to purchase your next best alternative. How do trade-
offs and opportunity costs differ?
Answer: A trade-off is the choice a

person makes between alternatives.
Opportunity cost is the next best
alternative that is given up when
making that choice. making economic decisions at all levels. Businesses must con-
sider trade-offs and opportunity costs when they choose to invest
money or hire workers to produce one good rather than another.
Guided Reading Activity 12
Consider an example at the national level. Suppose Congress
Name Date Class
votes $220 billion to finance needed highways. Congress could
1-2
have voted for increased spending on new schools. The opportu-
nity cost of building new highways, then, is fewer new schools.
T RADE-OFFS
RECALLING THE FACTS
Directions: Use the information in your text book to answer the questions.
1. What is a trade-off?
2. What kinds of trade-offs do you make as a student? Obviously, many businesses produce more than one type of
3. What does an opportunity cost cause a person to lose? product. An automobile company, for example, may manufacture
4. What is important to know before one makes a decision related to their available resources? several makes of cars per plant in a given year. Does this mean
that the company makes no trade-offs? No, what this means is
5. What is a production possibilities curve?
that the company produces combinations of goodswhich still
results in an opportunity cost.
production possibilities curve: Economists use a model called the production possibilities
Project Economic Concepts graph showing the maximum curve to show the maximum combinations of goods and services
combinations of goods and ser-
Transparency 2 and have students vices that can be produced from a that can be produced from a fixed amount of resources in a given
discuss the accompanying questions. fixed amount of resources in a period of time. This curve can help people and businesses deter-
given period of time
mine how much of each item to produce, thus revealing the
trade-offs and opportunity costs involved in each decision.
Imagine that you run a jewelry-making business. Working
20 hours a week, you have enough resources to make either
10 bracelets or 5 pairs of earrings. If you want to make some
LESSON 1: OPPORTUNITY COSTS of both, Figure 1.6 shows your production possibilities.
Have students complete the
Economics Lab and Math The Classic Example The classic example for explain-
Practice sections of the lesson on ing production possibilities in economics is the trade-off
opportunity costs. Students will between military defense and civil-
ian goods, sometimes
determine whether firms have an
referred to as guns versus
absolute advantage or a compara-
butter. The extremes for a
tive advantage in producing certain
goods. Based on this information,
14 CHAPTER 1
students will decide which goods
the firms should produce.
Supplied in both CD-ROM and
disk formats.
Organize students into small groups to search through recent newspapers and maga-
zines to find articles that discuss economic decisions. Ask groups to list these economic
decisions. Then, for each decision, have group members indicate whether an individual or
group (a corporation or government, for example) made the decision, the opportunity costs
of the decision, and the economic benefits expected from each decision. Call on groups to
present their findings to the class in an illustrated report. BLOCK SCHEDULING
ECON: 2B, 5A-B, 15A, 23A, 23D, 24C-D
14
CHAPTER 1
nation would be using all its resources to produce only one or
SECTION
SECTION 2,
2, Pages
Pages 1216
1216
the other.
Look at Figure 1.7 on page 16. Point A on the graph represents
all resources being used to produce only guns (military defense).
Point E represents the other extremeall resources being used to Independent
produce only butter (civilian goods). The amount of military goods
given up in the year is the opportunity cost for increasing civilian
Practice
goods production. Members of the federal government determine L2 Creating Cartoons Have stu-
where on the curve the nation will be. dents create cartoons illustrating the
The real world and our graphs are not always quite the same, concept of opportunity cost. Call on
however. In the real world, it takes time to move from point A to volunteers to display and explain
point B. The important point is that by using a production possi- their cartoons. ELL BLOCK
bilities curve, a nation, business, or individual can decide how SCHEDULING ECON: 5A-B, 24D
best to use its resources.
FIGURE 1.6 Production Possibilities for Jewelry The curve here represents the Meeting Lesson
production possibilities between bracelets and pairs of earrings during a 20-hour Objectives
workweek. Note that if you make 10 bracelets (point A on
Assign Section 2 Assessment as
the curve), you have no resources or time to make earrings. If you make only
6 bracelets (point B on the curve), you have enough resources and time to also
homework or an in-class activity.
make 2 pairs of earrings. Therefore, the opportunity cost of making 2 pairs of Use Interactive Tutor Self-
earrings is the 4 bracelets not made. Although you are making both bracelets Assessment Software to review
and earrings, youand businesses and nationscannot produce more of one Section 2.
thing without giving up something else.
Production Possibilities for Jewelry
Direct students to study

5
Figure 1.6. ASK: How do the
Pairs of Earrings
numbers of bracelets and ear-

4
Production Possibilities Curve rings for each marked point on
the curve illustrate trade-offs and
3
opportunity costs? The numbers
B of earrings and bracelets at each
2
marked point illustrate trade-offs
in that they show the choices
1
made among alternative uses of
A resources. The numbers illustrate
1 2 3 4 5 6 7 8 9 10 opportunity costs because they
Number of Bracelets show the alternatives that were
given up in making those choices.
What Is Economics? 15 ECON: 5A-B, 23F-G, 25B
Extending the Content

Guns and Butter? Is it economically possible to have more guns and more butter? The
economists answer is, Yes, but . . . First, if resources are not being used to their full
potential, the level of production would fall inside the production possibilities curve. Using
resources efficiently would increase the production of both guns and butter. Second, sus-
tained economic growth over a lengthy period of time would push the production possibili- Student Edition TEKS
ties curve outward. Again, more of both guns and butter would be produced. Even so, in Page 14: 2B, 4B, 5A-B, 15A, 24A
both cases scarcity would still exist. The economy could not produce all the guns and butter Page 15: 4B, 5A-B, 15A, 23A,
to fulfill peoples wants. ECON: 4A-B, 5A-B 23F-G
15
CHAPTER 1
SECTION
SECTION 2,
2, Pages
Pages 1216
1216 The Classic Example 1.7
A Production Possibilities
8 You must give up this amount
of military goods . . . Military Goods Versus
Section Quiz 12 B Civilian Goods Nations produce
Military Goods (in $ billions)

7
Name Date Class x combinations, or mixes, of goods. If the
1, 2
6 nation starts with all gun production and
T no butter production (point A), it can
RADE-OFFS SCORE
C
Matching: Place a letter from Column B in the blank in Column A. (10 points each)
5 only get to some butter production
A B
1. trade-off a. a scarce resource
(point B) by giving up some gun produc-
2. opportunity cost
3. production possibilities curve

b. graph showing the maximal combinations of goods
and services that can be produced from a fixed
amount of resources in a given period of time
4 tion. In other words, the cost of having
4. guns versus butter
c. sacrificing one good or service to purchase or
produce another some civilian goods (represented by the
5. time d. value of the next best alternative given up for the . . . to gain this amount D
e.
alternative that was chosen
production possibilities involving choices between
3 of civilian goods horizontal distance from y to point z) is
military defense and civilian goods
giving up some military goods (repre-
pletes the statement or answers the question. (10 points each)
2
6. All economic choices involve
a. trade-offs. b. shortages.
sented by the vertical distance from
c. destruction of resources. d. tax dollars.
point A to point x).
7. What trade-off is involved when you buy a CD?
a. exchanging time for money b. exchanging money for goods 1
c. exchanging one service for another d. exchanging goods for services
y z E
1 2 3 4 5 6 7 8 9 10
Reteach Civilian Goods (in $ billions)
Have students write five ques- Practice and assess
tions for each of the two subsections key skills with
of Section 2. Pair students and have Skillbuilder Interactive
Workbook, Level 2.
partners use their questions to quiz
each other on the section content.
ECON: 23A 2
Reading Essentials and
Study Guide 12
Name Date Class Understanding Key Terms Action Result
1, 2 1. Define trade-off, opportunity cost, production 1.
possibilities curve. 2.
T RADE-OFFS
KEY TERMS
trade-off Sacrificing one good or service to purchase or produce another (page 12)
opportunity cost The value of the second-best choice that is given up when the first choice is chosen
Reviewing Objectives
(page 13)
production possibilities curve A graph that shows the greatest combination of goods and services that
can be produced from a specific amount of resources in a set period of time (page 14)
2. How are trade-offs and opportunity costs Economic Concepts
related? 4. Opportunity Cost What is the opportunity
Suppose that you want something very much but you do not have enough money to buy it. What 3. Graphic Organizer Create a diagram like the cost of going to a university for four years after
would you do to satisfy your desire for this item? Would you save money by packing your lunch
every day instead of buying it at school? Would you get a part-time job to earn extra money? one in the next column to identify the production high school instead of working?
Would you sell one of your possessions to raise the money you need? What sacrifices are you will-
ing to make to satisfy your want?
This section focuses on the costs of the choices that people make by examining what economists
possibilities of guns and butter using the follow-
call trade-offs and opportunity costs.
ing actions: Critical Thinking Activity
ORGANIZING YOUR THOUGHTS
Use the diagram below to help you take notes as you read the summaries that follow. Think
b t th diff b t t it t d t d ff
100% guns produced
5. Synthesizing Information Build your
70% butter produced
own production possibilities curve with
40% guns produced Hours Spent Watching TV on the horizontal
25% butter produced axis and Hours Spent Studying Economics
on the vertical axis. Write a caption explain-
ing the opportunity cost of each activity.
Have students explain how inter-
preting a production possibilities
curve enables a business to use its 16 CHAPTER 1
resources in an economically effi-

cient manner. ECON: 5A-B
1. All definitions can be found in the Glossary. 4. the potential earnings from having had a job
2. Every trade-off involves an opportunity cost. 5. Students production possibilities curves will
3. 100% guns produced No butter produced; vary.
70% butter produced 30% guns produced;
40% guns produced 60% butter produced;
25% butter produced 75% guns produced
16
SPOTLIGHT
SPOTLIGHT ON THE ECONOMY As students read the article, have

them note the role that technology
played in the development of the
Coasters Find a Whole new roller coasters. ASK: How is

the Jokers Jinx different from con-
ventional roller coasters? It is pow-
New Way to Roll ered by linear induction motors,
which slingshot it out of the station.
Check It Out! In this chapter you learned about the fac-
In contrast, conventional coasters are
than four seconds. The
tors of productionland, labor, capital, and entrepre- dragged by chains or cable.
secret is the high-tech
neurship. In the following article, read to learn how ECON: 26A
traditional roller coasters are being modernized, keep-
motors, about 200 of
ing in mind the factors of production needed to perform which are used in each
this modernization. coaster. When juiced with
an alternating current, the
motors create an electro-
H old on tight. The Jokers Jinx, a new roller
coaster at the Six Flags America theme
park in Largo, Maryland, will make its debut
magnetic force that accel-
erates the coaster over the
To find up-to-date news and
analysis on the economy, busi-
first 200 feet of the ride.
ness, technology, markets,
this coming May. And its trick piece of technol- entrepreneurs, investments,
ogy, the linear induction motor (LIM), is help- Reprinted from April 12, 1999
issue of Business Week by special permission, and finance, have students
ing redefine the way roller coasters roll. The copyright 1999 by The McGraw-Hill Companies, Inc.
search feature articles and spe-
new beasts are faster, smoother, and scarier
Think About It cial reports on the Business
than their wooden predecessors.
Week Web site.
So far, Premier Rides of Maryland, the roller 1. Provide two examples of each factor of production
www.businessweek.com
coaster manufacturer that helped develop the that went into developing the new coasters.
technology, has launched seven LIM coasters. 2. What is the opportunity cost of spending a day at
Three more, including The Jokers Jinx, will fol- an amusement park?
low this year. Conventional roller coasters are
dragged by chains or cablesclank, clank,
clankto the top of the first hill. Then
gravity causes the cars to accelerate. Medusa was another new
In contrast, Premier Rides coast- roller coaster introduced by the
ers slingshot passengers out Six Flags group in 1999. It was
of the loading station, the worlds first heartline roller
accelerating from coaster. In a heartline, riders feel
zero to 70 miles
as if there is nothing above or
per hour in less
below them. On Medusa, passen-
gers feet dangle without touching
What Is Economics? 17 anything below. The tilt of the
seats gives riders the impression
that they are open to the sky
above.
Answers to Think About It
1. Examples may include: Landraw materials to make steel for rails, waiting platform;
Laborworkers who manufactured new motors and constructed the new roller
coaster; Capitalelectricity that produces electromagnetic force, computers and robots
that built linear induction motor; EntrepreneurshipPremier Rides of Maryland devel-
oped new technology, Six Flags America introduced new ride to the public Student Edition TEKS
2. the next best alternative given up to go to the amusement park Page 16: 5A-B, 23A, 23D, 23F-G,
24A
Page 17: 5A-B, 23A, 26A
17
CHAPTER 1
SECTION
SECTION 3,
3, Pages
Pages 1823
1823
3
Overview
Section 3 describes and explains
the use of economic models by READERS GUIDE
economists. Terms to Know
microeconomics
macroeconomics BUSINESS WEEK, FEBRUARY 15, 1999
BELLRINGER economy Are Americans in the grip of a luxury fever? It would
Motivational Activity economic model
seem so. The $5,000-a-night suites at Aspens Little
hypothesis
Nell hotel are booked up months in advance, as are all
Project Daily Focus
Reading Objectives 84 spots on World Tours $38,000-a-head round-
Transparency 3 and have
1. How do economists use the-world excursions. Yacht mak-
students answer the questions. models to study ers are so backlogged that
This activity is also available the real world?
used boats sell for close to
as a blackline master. 2. Why are there
their original prices. Vacation
different schools
Daily Focus Transparency 3 of economic houses are booming, as is
thought? everything from cosmetic
surgery to expensive cigars
3
and wines.
1. As the price of movie videos goes up, the amount producers are willing to supply
also goes up. 2. As the price of movie videos goes up, the amount consumers will
E CONOMIC MODELS
But are Americans happy?
Supply & Demand Model for Movie Videos

demand, or want to purchase, goes down.
$20
Supply
$18
Answers
A
$16
Price per movie video
s youve learned, economics is a social science concerned

$14
with the ways individuals and nations choose to use their
$12
scarce resources. Economists might analyze how the
$10
Demand super-rich spend their income, for example, and the effect this
spending has on the economy. As you read this section, youll

0 200 400 600
Amount
800 1000 1200
microeconomics: the branch of
economic theory that deals with find that something economists dont do, however, is judge
1. As the price of movie videos goes up, what happens to the
amount producers are willing to supply?
2. As the price of movie videos goes up, what happens to the
behavior and decision making by whether there should be a social strata of the super-rich. They
small units such as individuals
amount consumers will demand, or want to purchase?
and firms
leave value judgments up to other social scientists.
Daily Focus Transparencies Another thing to keep in mind as you read this textbook is
macroeconomics: the branch of that economics is divided into two parts. Microeconomics is
economic theory dealing with the the branch of economic theory that deals with behavior and
READERS GUIDE economy as a whole and decision
making by large units such as decision making by small units such as individuals and firms.
governments Macroeconomics is that branch of economic theory dealing
Answers to the Reading Objectives
questions are on page 23. 18 CHAPTER 1
Have students show how the
Terms to Know are related by
using them together in sentences. SECTION 3 RESOURCE MANAGER
Call on volunteers to share their
sentences with the rest of the class. Reproducible Masters Multimedia
ECON: 24A Reproducible Lesson Plan 13 Daily Focus Transparency 3
Vocabulary PuzzleMaker Reading Essentials and Study Guide 13 Vocabulary PuzzleMaker CD-ROM
Guided Reading Activity 13 Interactive Tutor Self-Assessment Software
Section Quiz 13 ExamView Pro Testmaker
Daily Focus Activity 3 MindJogger Videoquiz
Daily Lecture Notes 13 Presentation Plus!
18
CHAPTER 1
with the economy as a whole and decision
SECTION
SECTION 3,
3, Pages
Pages 1823
1823
making by large units such as governments.
Economic Models C AREERS

To economists, the word economy means
all the activity in a nation that together Economist
affects the production, distribution, and use
Job Description
Guided Practice
of goods and services. When studying a spe- Qualifications
cific part of the economyrising teenage
Research, col- Masters degree
L3 Synthesizing Read through
lect, and ana- in economics the information in Figure 1.9 with
unemployment, for exampleeconomists lyze economic
often formulate theories and gather data. See Experience students. Next, have them study
data
Figure 1.8. The theories that economists use Monitor eco-
gathering and Figure 1.10 and the text related to
analyzing data it. Then ask students to use the
in their work are called economic models, nomic trends for economic
which are simplified representations of the and develop models
information they have gathered to
real world. Solutions that emerge from test- forecasts develop and test a hypothesis on
ing economic models often become the Advise busi- teenage unemployment and the
basis for actual decisions by private business, govern- minimum wage. ECON: 23A, 23D
ment, and other
nesses or government agencies.
organizations on
economic policy Daily Lecture Notes 13
What Models Show Physicists,
chemists, biologists, and other scientists use Median Salary: $65,300 1-3
models to understand in simple terms the
Job Outlook: Above average L ECTURE LAUNCHER
complex workings of the world. Similarly, Even scientific models that have been accepted for centuries can be discredited. For example,
Occupational Outlook Han
one purpose of economic models is to show dbook, 200001
for over 1,500 years, people accepted Ptolemys model of the universe, in which the sun and
all the other planets revolved around the earth. What planetary model took its place? Would
it have been possible to discredit the Ptolemy model without offering an alternative model to
visual representations of consumer, busi- replace it?
PAGES 1922
ness, or other economic behavior. The pro- I. Economic Models
A. Economic models are theories economists use that are simplified representations of the
duction possibilities curve that you learned about in Section 2 economy: the production and real world.
B. Models show how people behave economically.
is an economic model that reveals opportunity cost. The most distribution of goods and services C. When using a model, assume that some factors remain constant.
in a society D. When creating a model, show basic factors, not every detail.
common economic model is a line graph explaining how E. Testing models verifies how accurately the models represent reality under certain
conditions.
F. Models may not always be accurate due to the inability to predict human behavior.
economic model: a theory or Discussion Question

Suppose you want to explore correlations between peace, war, and inflation. How
simplified representation that would you create, test, and apply the model? (Sample response: Collect inflation data on
various countries and look for correlations during peace time and war. Create a model that
helps explain and predict eco- best describes the relationship you found between war, peace, and inflation. Collect addition-

al inflation data to further test your model. Apply your model by predicting how peace and
nomic behavior in the real world war will affect a nations rate of inflation in the future.)
PAGES 2223
II. Schools of Economic Thought
A. Economists are influenced by personal opinions, beliefs, and the government under
which they live.
B. This leads to different economic theories.
C. Different schools of thought can have an impact on laws and government policies.
turn
Daily Lecture Notes 4
1.8
Help Wanted Economic models are developed to
help solve problems such as teenage unemployment.
What is the purpose of economic models?
Answer: to show visual representa-
tions of consumer, business, or
What Is Economics? 19 other economic behavior
Meeting Special Needs

Language Disability Practice is an important part of learning. Those with weaker reading
skills need guided practice, which may be phased out as mastery of the skill develops.
Have students restate sentences in Section 3, using common language. Listen to students
sentences to be sure they understand that you are not asking simply for a rearrangement of
words, but for them to state the idea of the sentence in their own words. ELL ECON: 23A Student Edition TEKS
Refer to Inclusion for the Social Studies Classroom Strategies and Activities for Page 18: 1B, 2B, 4A-B, 5A, 15A,
students with different learning styles. 23A, 24A
Page 19: 4A-B, 23A, 24A, 25A
19
CHAPTER 1
consumers react to changes in the prices of goods and services.
SECTION
SECTION 3,
3, Pages
Pages 1823
1823
Youll learn about this model in Chapter 7.
Economic models assume that some factors remain constant.
hypothesis: an assumption
involving two or more variables In studying the production possibilities curve for making jewelry
that must be tested for validity in Section 2, for example, we assumed that the price of inputs
(beads, wire, and so on) would not increase.
We also assumed that inclement weather
Discuss the content of would not close schools for a day, which
Figure 1.9 with students. Then FIGURE 1.9 would have enabled you to work more than
ask students to recast this infor- 20 hours a week on jewelry.
mation in the form of a flow Why are these constant-factor assump-
chart. ECON: 23A, 23F Using a Hypothesis tions important? Economists realize that, in
the real world, several things may be chang-
The list below reviews the steps involved in ing at once. Using a model holds everything
making and testing hypotheses. In working with steady except the variables assumed to be
Guided Reading Activity 13
models, economists use these same steps. related. In the same way that a map does not
Name Date Class
show every alley and building in a given
1-3
1. Define the problem.
location, economic models do not record
For Use with textbook pages 1823
2. From the possible alternatives, state a hypothe- every detail and relationship that exists
W HAT DO ECONOMISTS DO?
sis that appears to offer the best solution to a about a problem to be studied. A model will
OUTLINING
Directions: Locate the heading in your textbook. Then use the information under the heading to help you
write each answer. Use another sheet of paper if necessary.
problem or explanation of an event. show only the basic factors needed to ana-
I. IntroductionDescribe the two large fields into which economics is divided.
3. Gather data to test the hypothesis. Besides lyze the problem at hand.
II. Economic ModelsWhat is the purpose of an economic model?
using facts from the real world, an economist

Creating a Model
A. What Models Show
1. What does a production possibilities curve reveal?
must identify economic principles involved. Models are useful if
2. What is the most common economic model?
3. What do economic models assume? 4. Evaluate the data and discard any that are not they help us analyze the way the real world
B. Creating a Model relevant, or related to the immediate situation, works. An economist begins with some idea
1. In what way are models helpful to economists?
2. What does an economist develop in order to test his or her theory or model?
or that are not based on fact. about the way things work, then collects
facts and discards those that are not rele-
C. Testing a ModelHow does testing models help economists test their hypotheses?
5. Make sure there are enough data to test the vant. Lets assume that an economist wants
D. Applying Models to Real LifeWhy is it difficult for economists to apply the results of economic models?
hypothesis thoroughly.
II. Schools of Economic Thought to find out why teenage unemployment rises
A. IntroductionWhy do economists disagree over economic theories?
B. Values and Economics

6. Develop a conclusion based on the data. To do periodically. Perhaps this unemployment
1. What are values?
this, an economist evaluates whether the alter- occurs when the federal minimum wage
2. What can the science of economics not help judge?
native is the best, in view of its consequences goes up, thereby forcing employers to pay
Guided Reading Activities 3
and trade-offs. their teenage workers more or to lay some

workers off. The economist can test this the-
Independent 7. If the hypothesis appears to be valid, retest it
with new data to see if the same results can be ory, or model, in the same way that other
Practice obtained again. scientists test a hypothesisan educated
guess or prediction. Figure 1.9 explains
L1 Creating Posters Refer students 8. If the hypothesis still appears to be valid, form
how hypotheses are used as the starting
to the definition of the term economy a generalization that can be applied to other
cases. A generalization pulls together common point for investigations.
on page 19. Then have students work
in small groups to create a poster ideas among facts and is true in most cases. For
an economist, this step involves developing an Testing a Model Testing a model, or
illustrating that definition. Tell hypothesis, allows economists to see if the
economic policy based on the best alternative.
groups that their posters should be model represents reality under certain
designed as teaching aids for an eco-
nomics class. Display finished 20 CHAPTER 1
posters around the classroom. ELL
BLOCK SCHEDULING ECON: 23A,
24A, 24D
Organize the class into groups of three or four. Direct groups to locate economic mod-
els in recent editions of newspapers and magazines. Encourage groups to record the eco-
nomic issue addressed by each model and whether it is presented in text form, in visual
form, or as a mathematical equation. Have groups present their findings in the form of an
annotated graph. BLOCK SCHEDULING ECON: 23A-B, 23F-G, 24C-D
20
CHAPTER 1
conditions. Suppose an economist has developed the model
SECTION
SECTION 3,
3, Pages
Pages 1823
1823
shown in Graph A of Figure 1.10. The economist would collect
data on the amount of teenage unemployment every year for the
last 30 years. He or she would also gather 30 years of information
on federal legislation that increased the legal minimum wage paid
to teenagers.
The economist can be fairly satisfied with the model if teenage
unemployment rose every time the minimum wage rate increased. The area of economics that uses
But suppose that the data instead resulted in Graph B of Figure mathematical models to analyze,
1.10, which does not show a relationship between teenage interpret, and predict economic
unemployment and increases in the legal minimum wage. The behavior is known as econometrics.
economist then will have to develop another model to explain Economists Ragnar Frisch of
changes in teenage unemployment. Norway and Jan Tinbergen of
Holland developed this approach
Applying Models to Real Life Much of the work of econo- in the 1930s. They won the 1969
mists involves predicting how people will react in a particular sit- Nobel Prize in economics for their
uation. Individual human behavior is not always predictable, groundbreaking work.
though. As a result, an economists predictive model may not ECON: 19A, 24A
apply under different conditions.
L3 Debating To provide an exam-

FIGURE 1.10 ple of differing opinions on eco-
nomic issues, organize the class to
debate the following: ResolvedThe
Economic Models The purpose of economic models is to show visual representations of consumer, business, government should spend more
or other economic behavior. Economic models, however, must be tested to see if they represent reality. Graph A
money on education, even if it
supports the theory that a direct relationship exists between increases in the minimum wage rate and increases
in teenage unemployment. Graph B does not support that theory. requires raising taxes.
After the debate, ask students to
analyze the differences in values
Graph A Graph B that the debate illustrates.
ECON: 15A, 17B, 21A-B, 23A, 23D
35 35
Percent of Teenagers
Percent of Teenagers
30 30
Unemployed
Unemployed
25 25
20 20 As students review the infor-
mation in Figure 1.10, point out
15 15
that whenever an increase in the
10 10 minimum wage is debated, a
5 5 major argument against an
increase is that it will cause
$1 $2 $3 $4 $5 $1 $2 $3 $4 $5 unemployment. ECON: 15A-B
Hourly Minimum Wage Rate Hourly Minimum Wage Rate
Relevant Issues in Economics

Economic Models and Accuracy Economic models do not always accurately predict
economic behavior. For example, economists in the 1970s were surprised when the tradi-
tional methods of fighting inflationreducing the money supply and raising taxesfailed
to bring prices under control. Even more surprising, the high inflation was accompanied by
an economic slowdown. This situation was so unusual that economists had to create a
new termstagflationto describe it. ECON: 17A, 17C, 18B Student Edition TEKS
Page 20: 15A-B, 23A, 23D, 24A
Page 21: 7A, 15A, 23A, 23F-G
21
CHAPTER 1
For example, some economists believe
SECTION
SECTION 3,
3, Pages
Pages 1823
1823
that to stimulate the economy, taxes should
be cut and government spending increased.
Cutting taxes, these economists believe,
Student Web Activity Visit the Economics may put more income into consumers
Today and Tomorrow Web site at tx.ett.glencoe.com
pockets, which will increase personal
and click on Chapter 1 Student Web
spending and increase total production.
Activities to learn about famous economists and
See the Web Activity Lesson their contributions.
However, some peoples fears concerning
possible higher taxes in the future might
tx.ett.glencoe.com for an
Plan at ett.glencoe.com
cause them to save the extra income rather
introduction, lesson description,
than spend it. As this example illustrates,
and answers to the Student Web
economists cannot take into account all of the factors that may
Activity for this chapter.
influence peoples behavior.
Schools of Economic Thought

Economists deal with facts. Their personal opinions and
beliefs may nonetheless influence how they view those facts and
Meeting Lesson fit them to theories. The government under which an economist
Objectives lives also shapes how he or she views the world. As a result, all
economists will not agree that a particular theory offers the best
Assign Section 3 Assessment as solution to a problem. Often, economists from competing schools
homework or an in-class activity. of thought claim that their theories are better in predicting a cer-
Use Interactive Tutor Self- tain result than are others theories. See Figure 1.11.
Assessment Software to review During a given period of time, a nations political leaders may
Section 3. agree with one school of economic thought and develop policies
based on it. Later, leaders may agree with another group of econ-
omists. Throughout American history, many economists have
Section Quiz 13 stressed the importance of government maintaining hands off
in business and consumer affairs as a method of preventing
Name Date Class
1, 3
increased unemployment and
inflation. Other influential
W HAT DO ECONOMISTS DO? SCORE
Matching: Place a letter from Column B in the blank in Column A. (10 points each)
economists have proposed
A B that the federal government
1. economy a. an assumption involving two or more variables that
2. economic model
b.
must be tested for validity
the production and distribution of goods and
services in a society
should intervene in the econ-
3. hypothesis
4. constant factors
c.
d.
the beliefs or characteristics that a person or group
considers important
a theory or simplified representation that helps
omy to reduce unemploy-
5. values
e.
explain and predict economic behavior in the real
world
everything in an economic model except the
ment and prevent inflation.
variables being analyzed
pletes the statement of answers the question. (10 points each)
6. The first step in creating an economic model is to
a. evaluate the data. b. form a generalization.
c. define the problem. d. state a hypothesis.
7. Economic models are useful because they
a. show the way people react to changes in the economy.
b. provide every detail about a problem to be studied.
1.11
c. judge the value of economic events.
d. make testing hypotheses unnecessary.
8. Why cant economic models judge whether policies are good or bad?
a. Models are not good enough.
c. Models are not based on fact.
b. Judgments depend on values.
d. Economists do not test their hypotheses. Economic Information
9. Different schools of economic thought exist because
a. economics deals with values.
c. personal beliefs influence how economists
b. political leaders determine economic theories.
d. economists evaluate different kinds of data.
Economists analyze events and
apply facts to theories.
10. Which of the following describes what economists do?

their effects on the economy.
a. predict which policies will be good or bad b. offer solutions to economic problems
c. consider every detail of a problem d. rely on public opinion
22
Section Quiz 3
Free Enterprise Activity

Point out that in a free enterprise system, the emphasis is on the individual. Identify
some roles the individual may play in a free enterprise system, including consumer, pro-
ducer, owner of factors of production, voting citizen, investor, and saver. Next, have stu-
dents assume each role, explaining why their assigned role is important in a free
enterprise economy and illustrating how their role is interdependent with others. Direct the
rest of the class to discuss and add to the students descriptions. ECON: 1A-B, 2A-B, 4A-B,
23A, 23D
22
CHAPTER 1
Values and Economics Learning about economics will help SECTION
SECTION 3,
3, Pages
Pages 1823
1823
you predict what may happen if certain events occur or certain
policies are followed. But economics will not tell you whether the
result will be good or bad. Judgments about results depend on a
persons values. Reteach
Values are the beliefs or characteristics that a person or group Have students write two brief
considers important, such as religious freedom, equal opportu-
paragraphs summarizing the main
nity, individual initiative, freedom from want, and so on. Even
ideas in each of the two main sec-
having the same values does not mean that people will agree
tion subheads. Make sure to tell stu-
about solutions to problems, strategies, or interpretation of data,
dents to use proper grammar,
however.
For example, those in favor of decreasing teenage unemploy- punctuation, sentence structure,
ment in order to bring about economic opportunity may disagree and correct spelling. ECON: 23A,
about the best way to solve this problem. If you were a legislator, 24B, 24D
you might show your commitment to this value by introducing a
Reading Essentials and
bill to decrease teenage unemployment. The economists who help Study Guide 13
you research the causes of teenage unemployment will tell you,
Name Date Class
based on their expertise, whether the proposed solution will

1, 3
actually reduce teenage unemployment. For use with textbook pages 1823
Remember, however, that the science of economics is not used W HAT DO ECONOMISTS DO?
to judge whether a certain policy is good or bad. Economists KEY TERMS

economy All the activities that are part of the production and distribution of goods and services in a
only inform us as to likely short-term and long-term outcomes society (page 18)
economic model A simplified representation that helps explain and predict economic behavior in the real
world (page 19)
hypothesis An educated guess or prediction that is based on known facts and which must be tested to
of these policies. determine if it is true (page 20)
Practice and assess

key skills with Have you ever thought that going on a date might be an economic activity? Nobel Prize-winning
economist Gary Becker has. He sees dating as part of a marriage market. According to Becker,
Skillbuilder Interactive the opportunity cost of marrying the first prospect you meet is very high. This is because many
better candidates probably exist. So people expend their resources by dating in order to search for
Workbook, Level 2. increasingly better prospects for marriage. The search stops when the costs of dating become
greater than the increased benefit that would result from finding an even better prospect.
This section focuses on how economists develop economic theories and apply them to real-life
situations.
ORGANIZING YOUR THOUGHTS

Use the diagram below to help you take notes as you read the summaries that follow. Think
3 about the steps that economists take in developing economic models.

Form an _________ . Gather _________ . Test the Model.
READ TO LEARN
Introduction (page 18)
Economics is a social science concerned with how societies use their scarce resources. However,
Understanding Key Terms 3. Why are there different schools of economic economists do not make value judgements.
Economic Models (page 18)

thought?
1. Define microeconomics, macroeconomics, To an economist, the word economy means all the activity that affects the production, distribu-
tion, and use of goods and services. Economists study specific parts of the economy by forming
theories and gathering data. The theories that they use are called economic models. An eco-
economy, economic model, hypothesis. nomic model is a simplified representation of the real world. Economists test possible solutions to
Applying Economic Concepts 6 Study Guide
Reviewing Objectives 4. Economic Models If you were to make a

model showing the effect of hiring senior citi-
2. Graphic Organizer Create a diagram like the
zens into previously-held teenage job markets,
one below to show how economists use models
what factors would you analyze?
to study the real world.
Idea
Critical Thinking Activity Lead students in a discussion of
Test Hypothesis 5. Distinguishing Fact From Opinion the following question: How can an
Write three headlines about the economy understanding of basic economic
that reveal a value judgment. Then rewrite
the headlines to omit the value judgment.
principles help people become
more effective citizens? ECON: 23A,
23D
1. All definitions can be found in the Glossary. 4. changes in employment among senior citizens
and changes in unemployment levels among
2. Idea Gather Data Evaluate Data teenagers
Draw Conclusion Test Hypothesis 5. Newspaper headlines will vary.
3. Economists personal opinions and beliefs may Student Edition TEKS
influence how they view facts and fit them to Page 22: 15A, 17A, 19A
theories. The government under which econo-
mists live also shapes how they view the world.
Page 23: 19A, 21A, 23A-B, 23D,
23F, 24A, 24D
23
23
Background
During his studies at Harvard
University and the New School for
Social Research, Robert Heilbroner
Robert L. Heilbroner
became fascinated with the eco- ECONOMIST (1919)
nomic theories of Adam Smith, Karl
Marx, John Stuart Mill, and other
disagrees with the perception
classical economists. This fascina-
tion led him to write The Worldly
Philosophers. When the book was
R obert L. Heilbroners book
The Worldly Philosophers
gives a unique and insightful
that the work of economists is
dull and boring:
first published in 1953, sales were Attended Harvard look into the lives and works of
slow. Over time, however, it became
a mainstay of college economics
University and the the great economists of the past. . . . A man who thinks that
economics is only a matter for pro-
New School for In his introduction, Heilbroner
courses. By the late 1990s, sales Social Research in fessors forgets that this is the science
explains the importance of these
had passed the two million mark. New York City that has sent men to the barri-
great economists to history:
Heilbroners success as an author Has taught at the
cades. . . . No, the great economists
lies in his ability to convey to read-
ers his feelings about economics
New School for
Social Research
By all rules of schoolboy his-
tory books, they were nonentities:
pursued an inquiry as excitingand
dangerousas any the world has
that it is a dynamic and exciting since 1972 they commanded no armies, sent ever known. . . . The notions of
subject. ECON: 19A Published no men to their deaths, ruled no the great economists were world-
The Worldly empires, took little part in history- shaking, and their mistakes nothing
Philosophers (1953),
The Future as
making decisions. . . . Yet what
they did was more decisive for his-
short of calamitous.

History (1960), Checking for Understanding
Visions of the tory than many acts of statesmen
1. Why is it important to study the great
Call on volunteers to read aloud Future (1995), and who basked in brighter glory, often
economists of the past?
the quoted excerpts from The The Crisis of Vision more profoundly disturbing than
Worldly Philosophers. Then have stu- in Modern the shuttling of armies back and 2. What impact have economists made
dents paraphrase each excerpt to Economic Thought in the world? Explain your answer.
forth across frontiers, more power-
(1996)
gain a better understanding of ful for good and bad than the
Heilbroners ideas. Finally, ask stu- edicts of kings and legislatures. It
dents to complete the Checking for was this: they shaped and swayed
Understanding questions.
Interested students may wish to
mens minds.

review Heilbroners book Teachings Heilbroner expresses his
from the Worldly Philosophy (1996), belief that economists have a
a collection of readings from the major impact on the world. He
worldly philosophers themselves.
ECON: 19A, 23A
24
Answers to Checking for Understanding

1. Answers will vary but should indicate that it is important to study the great econo-
mists because their ideas had historical implications.
2. Answers will vary but should indicate that economists made a difference in that their
ideas shaped economic policies and practices.
24
CHAPTER 1
CHAPTER
1
ECONOMICS
& YOU
What Is Economics?
Chapter Overview Visit the Economics

!77B6" Chapter 2
Disc 1, Side 1
and click on Chapter 1 Chapter Overviews
to review chapter information. Also available in VHS.
The cost of making a trade-off is known as

opportunity costthe value of the next best alter-
SECTION 1 The Basic Problem native that had to be given up to do the action that Use the Chapter 1 Summary to
was chosen. preview, review, condense, or
in Economics
A production possibilities curve is a graph that reteach the chapter.
Economics is the study of how individuals, fami- shows the maximum combinations of goods and
lies, businesses, and societies use limited services that can be produced from a fixed amount
resources to fulfill their unlimited wants. of resources in a given period of time. Preview/Review
Individuals satisfy their unlimited wants in a world The classic example for explaining production pos- Vocabulary PuzzleMaker
of limited resources by making choices. sibilities in economics is the trade-off between
CD-ROM reinforces the key terms
guns (military defense) and butter (civilian goods).
The need to make choices arises because of used in Chapter 1.
scarcity, the basic problem of economics.
Interactive Tutor Self-Assess-
The resources needed to make goods and services SECTION 3 What Do Economists Do? ment Software allows students to
are known as the factors of production. review Chapter 1 content.
Economists study the economyall the activity in
The four factors of production include land, or a nation that together affects the production, distri-
natural resources; labor, also known as human bution, and use of goods and services.
resources; capital, the manufactured goods used Condense
to make other goods and services; and entrepre- Economists also formulate theories called eco-
neurship, the ability of risk-taking individuals to
nomic models, which are simplified representa- Have students listen to the
tions of the real world. Chapter 1 Audio Program (also
start new businesses and introduce new products
and processes. Economists test their models in the same way that available in Spanish) in the TCR.
other scientists test hypotheses, or educated Assign the Chapter 1 Audio Program
Some economists add technology to the list of fac-
guesses. Activity and give students the Chap-
tors of production.
Economists deal with facts, although their personal ter 1 Audio Program Test.
opinions may sway their theories.
SECTION 2 Trade-Offs
Economists offer solutions to economic problems, Reteach
People are forced to make trade-offs every time but they do not put value judgments on those
they use their resources in one way and not another. solutions. Have students com-
plete Reteaching Activity 1 in the
What Is Economics? 25 TCR (Spanish Reteaching Activities
are also available).
Economics Journal
Opportunity Cost Have students start an Economics Portfolio in which they store the
Economics Journal writing activities for this and subsequent chapters. Ask students to
keep track of all the economic decisions they make during a set time periodone week,
perhaps. Remind students that they should record the money they spend, the items they
purchase, and the choices they make. Also suggest that they note the reasons for these Student Edition TEKS
various choices. Direct students to complete their journal entries by writing a brief explana- Page 24: 19A, 23A, 23D
tion of how their growing knowledge of economics helped them become better decision Page 25: 4A-B, 5A-B, 15A, 19A,
makers. ECON: 1B, 4B, 5A, 23A, 23D, 25B 24A, 25A
25
CHAPTER 1
Assessment and Activities 1
Have students visit the

Economics Today and Tomorrow
tx.ett.glencoe.com to
Web site at ett.glencoe.com Section 2
review Chapter 1 and take the 5. What does making a trade-off require
Self-Check Quiz. you to do?
Self-Check Quiz Visit the Economics
6. What do economists call the next best
and click on Chapter 1 Self-Check Quizzes
alternative that had to be given up for
to prepare for the Chapter Test. the one chosen?
7. In economics, what is cost?
8. What does a production possibilities
curve show?
MindJogger Videoquiz
Identifying Key Terms
Write a short paragraph about the factors of Section 3
Use MindJogger to review 9. For what purposes do economists use
production in the United States using all of the
Chapter 1 content. real-world data in building models?
following terms.
scarcity 10. An economic theory is another name for
factors of production what?
11. When does an economist consider an
entrepreneurship
economic model useful?
technology
Identifying Key trade-off
Terms land
Thinking Critically
labor 1. Drawing Inferences and Conclusions Some
Paragraphs will vary.
capital people argue that air is not an economic
goods good. Explain why you agree or disagree
Recalling Facts services with this statement.
2. Categorizing Information Create three dia-
and Ideas grams like the one below and label the
Recalling Facts and Ideas
1. scarcity center oval with one of the following ser-
Section 1
2. Scarcity refers to the fixed, or vices: providing financial advice, teaching
1. What is the condition that results because
set, amount of resources avail- economics, producing a movie. Fill in
wants are unlimited?
able to fulfill unlimited wants. examples of each factor of production that
2. What is the difference between scarcity
Shortages refer to situations went into developing these services.
and shortages?
where items are temporarily in 3. Your friend says, I need some new
short supply. clothes. Under what conditions would
3. Answers may vary. However, this be expressing a need? A want?
most students will note that it 4. What are the four factors of production?
would be a need if the clothes
were an absolute necessity; it 26 CHAPTER 1
would be a want if a simple
desire for more clothes was
being expressed.
4. land, labor, capital, entrepre- 9. as the basis for testing theories that Thinking Critically
neurship explain an event or offer a solution to a
problem 1. Answers will vary. Some students may
5. to exchange one thing for the agree, pointing out that people do not
use of another 10. an economic model
11. if it provides useful material for analyzing have to give up anything of value to
6. opportunity cost breathe the air. Others might disagree,
7. a foregone opportunity the way the real world works
noting that because of pollution, an eco-
8. a graph showing the combina- nomic cost is paid to clean up the air and
tion of goods and services that to cover the medical expenses of those
can be produced with a fixed made sick by the pollution.
amount of resources in a given
period of time
26
CHAPTER 1
3. Summarizing Information Why will study- Reviewing Skills
ing economics not tell you whether a pos- Assessment and Activities
sible solution to a problem is either good Sequencing and Categorizing Information
or bad? In this chapter you learned that some econo-
mists add technology as a fifth factor of
production. Technology, as you recall, is an
Applying Economic
Applying Economic advance in knowledge leading to new and Concepts
Concepts improved goods and services and better ways Answers will vary. Students
of producing them. This includes any use of should make sure that the opportu-
Trade-Offs and Opportunity Costs Because land, labor, capital, and entrepreneurship that nity cost includes only the next-
your time is scarce, you are constantly facing produces goods and services more efficiently. highest ranked alternative.
trade-offs. Make a list of the trade-offs you Choose a product or service, and then
have made in choosing how you used your research the technology that went into devel-
time during a one-week period. What activi- oping it. Construct a diagram like the one Cooperative
ties did you choose to do? What were the below that displays in sequential order the
opportunity costs involved in your choices? Learning Project
technology involved in preparing the factors
of production that ultimately create your Students might present their
good or service. Share your diagram with the information in the form of a
Cooperative rest of the class. diagram.
Learning Project
Technological Influences On . . .
Working in groups of four, choose a con-
sumer product such as a DVD player, a pair
Technology Activity
Land Labor Capital Entrepreneurship
of sunglasses, or an automobile. Determine Home page designs will vary.
and list the elements of each of the four fac-
tors of production that went into making that
consumer product. Discuss your lists with Reviewing Skills
the rest of the class. Diagrams will vary.
Technology Analyzing the

Activity Your Product Global Economy
Using the Internet Each time you access the Reports will vary.
Internet you see advertisingbanners, buttons,
keywords, click-on ads, and other promo-
tions. Home pages of popular Web search
engines like Yahoo! face an opportunity cost:
any screen space that a site uses to promote Chapter Bonus
its own services cannot be sold to advertisers. Test Question
Design a home page for your own Web site. Watch television news reports and read
Assume that you can sell some screen space to newspapers and/or news magazines every ASK: When is an automobile
advertisers, but be aware that too many ads day for one week. Make a list of proposed considered a capital good?
will cause users to switch to a less cluttered actions on the part of international govern- when it is used to produce a ser-
site. Consider every square inch on your home ments that involve trade-offs and opportu- vice, such as pizza delivery
page as having an opportunity cost. nity costs. Report your findings to the class. ECON: 23A, 24A
2. Diagrams will vary. Possible examples: Producing a movieland: raw materials to

Providing financial adviceland: timber build movie sets; labor: actors, scriptwrit-
and steel for office buildings; labor: finan- ers; capital: movie cameras, costumes;
cial officer, clerks; capital: office build- entrepreneurship: ideas of director and
ings, telephone, computers; producer. Student Edition TEKS
entrepreneurship: officers ideas on finan- 3. Economists describe or predict behavior
cial issues. Teaching economicsland: raw the way people react. They are not con- Page 26: 4A-B, 5A-B, 19A, 19D,
materials used to build school buildings; cerned with value judgments and do not 23A, 23D, 23F, 24A
labor: teacher; capital: school buildings, try to suggest what people should think Page 27: 4A-B, 5A-B, 19D, 23A,
textbooks; entrepreneurship: teachers about a decision. 23D, 23F-G, 24A, 24C-D,
approach to teaching the subject. 25B, 26A, 26D
27
Focus on Focus on Free Enterprise
Free Enterprise
Amazon.com
Call on students who have made
Curling Up With a Good Book
I
a purchase on the Internet to raise n 1994 30-year-old Jeff Bezos, a
their hands. Ask them why they He finally decided on books because of
made the purchase by e-commerce Princeton summa cum laude graduate, the variety of product (more than a million
rather than through the traditional noticed that this newfangled thing called titles in print), because no single merchan-
approach of going to a store. Then disers dominated the market, and because
the World Wide Web was growing by 2,300
have them identify what they feel computer search engines could be very use-
percent a year. He wanted in by the ful in helping customers find hazily remem-
are the advantages and disadvan-
smartest available route. Methodically, he bered volumes.
tages of e-commerce. List their
Jeff Bezos, founder of Amazon.com, wasnt
responses on the board. Conclude drew up a list of products that could be the first to see that the Internet offered a
by mentioning that this feature pro-
sold on the Internet, including computers, useful way to match up people and books,
vides information on one of the
software, music, videos, and clothing. but he has pushed the concept harder and
leaders in e-commerce faster. Three years after making its first sale,
Amazon.com. ECON: 4B, 23A, 23D, Amazon.com was the third-largest book-
26A-B, 26D seller in the country, selling about $400
million worth of books, music, and videos.
Click and Buy

The central concept of online book-
Guide students through the text,
selling is breathtakingly simple: Instead of
having them note how Amazon.com
people going in search of books, make it so
compares with conventional book-
the books can come to them. For the first
stores. Then refer students to the list
on the board of advantages and dis-
advantages of e-commerce. Call on Jeff Bezos
volunteers to suggest which of the
listed advantages and disadvantages
apply to Amazon.com. ECON: 23A,
23D
Amazon.coms sales topped

$1.4 billion in 1999.
28
Teachers Notes
28
time, nearly any book is only a mouse click qualifies as equity in the traditional sense. It
and a few days away from any reader in the also takes advantage of its medium to allow
country. its customers to post their own book reviews
In a business using the most sophisti- onlinewhich costs nothing, yet bonds its
cated technology, Bezoss whole purpose readers into a community. Have students answer the Free
is to retrieve something that thrived in the Another advantage is that it doesnt have Enterprise in Action questions.
past. I want to transport online bookselling, to order most books from publishers or
he says, back to the days of the small book- wholesalers until a customer actually wants
seller who got to know you very well. them. A bookstore in the real world has to
Once the customer has made his choice, do things the opposite way: It orders a
a premium is put on speed. Customer serv- stack of books and hopes customers will
ice workers at Amazon.com take the orders want them. Remind students that Jeff Bezos
and pass them along to a wholesale book feels that, with Amazon.com, he is
company, which ships the books immedi- Cyber Irony returning to the days of the small
ately. Most books arrive at the customers Only a few years ago, futurists were pre- bookseller, who got to know you
front door only a few days after the order is dicting that the digital age would be the very well. Then point out that
sentso quickly, so painlessly that the death of conventional publishing. Instead, other people suggest that
buyer is supposed to lose interest in going the hottest business on the burgeoning Amazon.com is helping to destroy
to the library or superstore. I abide by the Internet is selling old-fashioned books. the small, independent bookseller.
theory that says in the late 20th century, Adapted from The Washington Post National Have students debate both views.
the scarcest resource is time, Bezos says. Weekly Edition, July 2027, 1998. ECON: 21A, 23A, 23D, 24D
If you can save people money and time,
theyll like that.
Free Enterprise in Action
Virtual Overhead
1. What is the basic concept of online book-
Since Amazon.com is virtual, it doesnt Amazon.com has steadily
selling?
have many of the fixed costs for real estate added to its product line. By 2000,
and employees that real-world bookstores 2. Why does Amazon.com have lower fixed
costs than regular bookstores? as well as books it was selling
do. As a company, Amazon initially owned
greeting cards, CDs and audio-
littleno buildings, no factories, nothing that
tapes, videos, computer software,
toys, electrical appliances, and
home-improvement products.
Amazon.com also offered online
auction services.
Answers to Free Enterprise In Action

1. Instead of people going in search of books, online book-selling makes it so the books
can come to them.
2. It does not have many of the fixed costs for real estate and employees that traditional
bookstores do. Also, it does not have to order most books from publishers or whole- Student Edition TEKS
salers until a customer actually wants them. Page 28: 4A-B, 5A, 19D, 26A-B,
26D
Page 29: 4A-B, 5A, 19D, 23A, 23D,
26A, 26D
29

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UNIT

The following transparencies may be used at any time during Unit 1.

Economic Forms and Financial Pages Transparencies

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WHAT JOB ARE YOU APPLYING FOR? ___________________________________________________________________________________________

PHONE ____________________________________ JOB __________________________________________________________________________

SUPERVISOR ____________________________________ DATES WORKED: FROM _________________________ TO: ____________________

SALARY ____________________________________ REASON FOR LEAVING ________________________________________________________

ADDRESS _______________________________ ADDRESS ________________________________ ADDRESS ________________________________

PHONE _________________________________ PHONE __________________________________ PHONE __________________________________ Alaska Hawaii

Signature________________________________________ Date _________________________

Economic Concepts Transparencies

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S CARCITY O PPORTUNITY COST & TRADE-OFFS E CONOMIC SYSTEMS

Economic Concepts 1 Economic Concepts 2 Economic Concepts 4

Real-World Economics Additional Glencoe Resources for This Unit

Assessment and Evaluation

that part of economic theory dealing with the economy

Chapter and Unit Tests

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j. sacrificing one good or service to purchase or produce

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RECALLING FACTS AND IDEAS Number of Number of

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90 Chapter and Unit Tests 4 Chapter and Unit Tests

Application and Enrichment

E CONOMICS: NO FREE LUNCHES 1 STEP 3. QUANTIFY THE GRAPH

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limited resources of individuals are money and time. Look at

tx.ett.glencoe.com socialstudies.glencoe.com Glencoe's Guide to Using the

Unit Overview Chapter 1

To find up-to-date news and

The basic problem facing

Teaching Transparencies Application and Enrichment

Name Date Class

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1. How should Sandy spend her $80?

3. What is Sandys opportunity cost based on her choices?

Economic Concepts 1 Economic Concepts 2

Application and Enrichment

1 1 Name Date Class

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2 Primary and Secondary Source Readings

Review and Reinforcement

3. What is the general subject of the excerpt?

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11. Economists formulate theories called .

12. A is an educated guess.

Assessment and Evaluation

Chapter 1 Test Form A Chapter 1 Test Form B Performance Assessment

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13. A companys office buildings are an example of enough resources to go around.

Section 1 Reproducible Lesson Plan 1-1 Daily Focus Transparency 1

Section 2 Reproducible Lesson Plan 1-2 Daily Focus Transparency 2

Section 3 Reproducible Lesson Plan 1-3 Daily Focus Transparency 3

*Also available in Spanish

PHONE JOB ______________________________________

SUPERVISOR ________________________ DATES WORKED: FROM _ TO: ________

SALARY REASON FOR LEAVING ____________________

ADDRESS _ ADDRESS ADDRESS __

PHONE _ PHONE PHONE ____ Alaska Hawaii

Signature________________ Date _