Unit 1: The Economy

and You
Chapter 1: Basic Economic Concepts
Chapter 2:Economic Resources and Systems
Chapter 3: Economic Activity in a Changing World
Chapter 4: Business Ethics and Social Responsibility
Unit 1 Essential questions

 Describe economic activity and how it affects everyday life.

 What is the difference between a “want” and a “need”?
 How do businesses satisfy wants and needs?
 Why must societies make decisions about what to produce?
 How do societies choose what to produce?
 How is economic activity measured?
 What are the phases of the business cycle?
 Why is it important for businesses to behave in an ethical manor?
 What does it mean for a business to be socially responsible?
Chapter 1: Basic Economic Concepts
learning goals
 State the difference between wants and needs
 Describe how resources limit the number of wants people and businesses can
satisfy
 Explain how to use the decision-making process to make the most of your
resources
 Explain how profit and competition motivate business
 List the activities businesses undertake when developing products and
services
 Explain how business impacts your and how you impact business
Key Vocabulary

 Wants  Market research

 Needs  Consumer
 Goods
 Services  This is going to be the beginning of
your business dictionary. This is a
 Resources year-long assignment which I can
 Business check at any time, so make sure it is
up to date. Make sure that the
 Profit dictionary is in alphabetical order
 Competition and each word is labeled with the
chapter where the word was found
in, as well as the definition and one
example of the word.
Introduction to Business Math

 Calculate cost to buy 100 shares of Apple inc., Bank of America, and Yahoo
Inc. as of today.
 What is the value of a company’s stock called in the market?
 Which company has the highest value in the market?
A Look at Wants and Needs

 Businesses make money by offering goods and services to satisfy the wants
and needs of consumers and other businesses. In this way, wants and needs
drive the US economy.
 Things I need to survive include _____________. Things I want include
____________
 List 5 examples of each.
 Compare your list with a partner’s to see any similarities and differences
A Look at Wants and Needs

 You have $25 to buy something on Amazon.com, assume no shipping or taxes,

what would you buy?
 Create a list at your table of the things you NEED then create a list of the things
you WANT
 Next create a list for the wants and needs of a business in general.
 Download- Anticipation Guide Principles of Finance
 Circle whether you agree or disagree, and your reason as to why. We will go over
the I learned section together.
Public vs. private wants and needs

 Public wants and similar to public utilities and services

 Highways, schools, libraries, parks, etc.
 Private wants are similar to the private sector businesses
 Subsidy on foreign goods
 Higher wages for the individual
Satisfying wants and needs

 The business market place consists of goods and services used to meet the
wants and needs of the consumer
 What companies produce goods?
 What companies produce services?
 Resources are used by businesses to supply these wants and needs
 What are some resources needed to create a smart phone?
 What are some resources needed to advertise a product?
Ethics in business

 You work as an event planner for a local company. You are in charge of hiring
a caterer for the company’s 10th anniversary celebration. You have bids from
four caterers in town. One of the bids is from a caterer who is an old friend.
Their bid is higher than the other three.
 Would your relationship with the caterer affect the company you would hire? Why?
Assignment

 Confidentiality Agreements
 A confidentiality agreement is a contract that requires the employee or contractor
not to reveal information that they acquire while working for an employer or
client.
 Research several agreements online to compare and contrast. Create a list with
the similarities and difference between the agreements. Make a few comments as
to which one seems harsher, were you surprised at the language, and how would
you like to need a confidentiality agreement to go to work?
Making the most of your resources

 What term is used to maximize your outputs with the minimum amount of
inputs?
 Use the following 5 steps to answer the following question:
 You found a $50 on the ground. You go on a shopping spree to get anything you
want for $50. The day after you finish your best friend comes up to you in tears
describing how they lost a $50 bill from their birthday. What do you do?
1. Identify the situation
2. Identify possible course of action
3. Determine the pros and cons
4. Make a decision
5. Evaluate your decision
Making the most of your resources

 In making a house hold budget, you determine that your basic needs require
75% of your monthly income. The items you listed as “wants” cost another
15%. If your monthly income is $2,500, how much are you spending on wants?
How much do you have left to save?
Creating a Presentation

 Presentation requirements:
 Note cards to project your voice and not talk to the board
 Use proper citations
 Keep slides uncluttered, but use appropriate graphics, fonts, and colors
Needs and the Environment

 We live in a very diverse climate with changing seasons and dynamic

temperatures that vary between 100o and 0o F. Pick a geographical area,
anywhere in the world. It could be a city, state, region, country, area as long
as it is defined. Now describe the wants and needs of the people in this
environment
 5 slides (not including the title or citations)
 Note cards
 Business casual
 Rubric-presentation
 5 vocab words from the chapter are to be used during the presentation
Business Activities

 Anticipation for business activities:

 At your table come up with one product you would like to analyze
 What resources are needed to create this product?
 What goods?
 What services?
 How does it get to the store shelf?

 Why do businesses produce overlapping products? For example, why do so many

stores sell bread?
How to define business

 What defines business?

 The ability to make a profit
 What are some businesses that you patronize?
 Why do you patronize these specific businesses?
 What would motivate anyone to start or maintain a business?
 The ability to make a profit
 List 5 successful entrepreneurs who started a business and what their company is
called
The significance of competition

 Companies can produce whatever they want, however they want

 Specific advantages based on pricing, ideas, production, efficiency, quality,
service, etc.
 Target market- a group of people identified as those most likely to become
customers
 Why do the best athletes and most talented actors make the most money?
 How come you can buy bread at so many locations?
 Why are there so many different brands of smart phones?
Business Activities

 Identify a need or want that needs to be satisfied

 Evaluate demand of products or services
 Acquire start-up money and capital
 Manage production
 Create a marketing plan
 Maintain good records or the business
Assignment: Presentation

 Research a unique product or service that you have never heard of

 Who created the product or service?
 What does the product or service do?
 Is there a company associated with this product or service? Is it successful?
 Can we buy this product/ how much does it cost?
 What is the target market for the product?
 Would you or your classmates be willing to buy this product?
How do you fit into business?

 As of right now you are considered a consumer

 Does business have a duty to supply your demands, or should a business

create a supply to help create your demand?
 If you could purchase just 1 item in the world, that is for sale, what would you buy?
Business careers

 Go to the link: http://www.bls.gov/ooh/. Click on the “A-Z Index” and enter

the search term “tomorrow’s jobs”
 Write a 1 page report about the topic. Conclude the paper with a list of
things that you can do now to prepare yourself for this occupation.
Chapter 1 Quiz

 Vocab review
Chapter 2: Economic Resources and
Systems
 Explain how scarcity requires individuals and nations to make decisions about
resources
 Describe the four factors of production
 Describe the three basic economic questions each country must answer to
make decisions about using its resources
 Contrast the way a market economy and a command economy answer the
three economic questions
Key vocabulary
 Scarcity
 Factors of Production
 Natural resources
 Labor resources
 Capital resources
 Entrepreneurial resource
 Entrepreneurship
 Entrepreneur
 economics
 Economic systems
 Market economy
 Price
 Supply
 Demand
 Equilibrium price
 Command economy
 Mixed economy
Economic Decision making

 Main factor governing production is scarcity

 What are some abundant resources? Scarce resources?
 Consumers are considered to have unlimited wants mixed with a limited
supply
 What are some decisions that you personally made that were governed by the
concept of scarcity
Factors of Production

 Natural resources
 Labor resources
 Capital resources
 Entrepreneurial resources
 What are the factors of
production that go into cheese?
Factors of Production

 What are some natural resources that are found in the US?
 What type of labor is found in the US?
 How are capital resources different from capital?
 List 5 successful Entrepreneurs from other countries and what they did.
Economic Systems

 Scarcity of economic resources forces every country to develop an economic

system that determines how resources will be used. Each system has
advantages and disadvantages.
 Economics studies how individuals and groups of individuals strive to satisfy
their needs and wants by making choices.
 Who, what, when, where, why, and how
Finding Natural Resources

 List 3 companies that primarily specialize in natural resource extraction

 What natural resources do they extract?
 Write a 1 page article about one of the companies and their products/ services
 Try include the share price and ticker symbol.
Types of Economies

Market Command
 Supply and demand  Central authority makes key
economic decisions
 Range of prices
 Government dictates supply and
 Equilibrium price
price
 Shortage  No competition
 Surplus  Low innovation
 Competition  Low monetary motivation
Types of economies

 Mixed economies
 Combination of a market and command economy
 Governments can pick and choose what features of each theory they will provide
Online assignment

 Go to CIA factbook
 Download- Comparative systems worksheet
 Fill out the worksheet comparing the three countries
 Answer the following questions using examples from your research.
 How can the presence or absence of natural resources and arable land affect a
nation's economy, regardless of the type of economic system?
 How can life expectancy and literacy rates affect the quality of labor in the
economy?
 How can fertility rates affect the use of scarce resources?
Online assignment

 How can GDP per capita and poverty rates indicate standards of living in each
system?
 How can the size of the industrial/service sector and the agriculture
employment rate indicate the level of industrialization?
 How can electricity, communication, and transportation facilities indicate the
potential for industrial growth?
 Considering the lack of natural resources, the labor problems, and the lack of
capital and little industrialization of developing countries, how can developing
countries develop? (Hint: Look at Economy - Overview for Chad).
Presentation

 You are starting your own country. Your limitations are 1 coastline available
to an ocean and 5 natural resources of your choosing.
 You can tailor the rest of your country to suit your needs as a government
choosing an economic system.
 What system would you install? Why?
 What would you produce?
 What would you keep under government control?
 What would you allow to be a private enterprise?
 1 Fun fact about your country
Chapter 2 Quiz

 Concentration game
Chapter 3: Economic Activity in a
Changing World
 Describe the four types of economic shifts the United States has experienced
 Describe what is shown by GDP, unemployment rate, rate of inflation, and
national debt.
 Explain how individuals and the government influence the economy
 Describe the four stages of the business cycle
Key vocab

 Gross Domestic Product  Depression

 Standard of living  Recovery
 Inflation
 Deflation
 Stagflation
 Budget deficit
 National debt
 Budget surplus
 Prosperity
 Recession
Calculating interest

Price Interest rate Interest (Price x Total value

Interest rate) ((price x
(1+interest rate)
$7,500 7%

$7,450 8%

$8,200 5%
Net or Newspapers

 On page 39 of your textbook read the reader and case study then fill out the
worksheet

 How has this shift changed the way we receive our news information??
The Changing Us Economy

 Throughout the years, the US economic system has changed. Each change
affected what was produced and how people were employed. To gauge the
health of our economic system, we use a variety of economic indicators

 In the 1600’s we bartered goods and services

 In the 1700’s farming revolutionized civilization and allowed for cities
 In the mid-1850’s the Industrial Revolution started
 In the 1900s information starts to move at a rapid pace to spur innovation
 Today we are mostly technology based, what will be the change of the future?
How is our Economy Doing?

 6 Key economic indicators

1. Gross Domestic Product
2. The Consumer price index
3. Industrial production
4. Interest rates
5. Non-farm payroll
6. Unemployment rate
How is our economy doing?

 Gross Domestic Product (GDP)- measures the dollar value of all goods and
services produced in the U.S. economy in one year.
 This is measured by the Department of Commerce Bureau of Economic Analysis
 Add the spending in the consumer, investment (firms), government, and foreign
(exports minus imports) sectors
 We must remove the effects of inflation from current GDP to compare the
current figures to GDP numbers from other years.
 Real GDP is the current GDP divided by the GDP price deflator.
 The real GDP is one of the most important indicators of economic performance.
 A rise in real GDP indicates economic growth, while a fall in real GDP indicates
economic decline
How is Our Economy Doing?

 The consumer price index compares the value of a basket of goods for urban
customers over time.
 An examples would be bread, milk, cereal, some vegetables, and some fruit
 This index is compared month-to-month, year-over-year, or its trend.
 This is kept by the Bureau of Labor and Statistics
 This is usually a lagging indicator of economic health
How is our Economy Doing?

 Industrial Production measures the output of American industry.

 The Federal Reserve Board of Governors measures Industrial Production by
calculating the manufacturing output in the consumer goods, business
equipment, construction supplies, materials, manufacturing, mining, and
utility industries.
 Production is calculated in each sector monthly, and the percentage change
in output is reported as Industrial Production.
 Durable goods, such as cars, appliances, and furniture, as well as construction
supplies, tend to be more sensitive to economic changes than are other
manufacturing products.
 Generally, Industrial Production increases during economic growth and falls
during periods of economic decline
How is our Economy Doing?

 The Ten-Year Treasury Interest Rate measures the percentage return

investors receive on U.S. Treasury bonds.
 The Federal Reserve Board of Governors measures Ten-Year Treasury Interest
Rates, as determined daily in the bond market.
 Treasury Interest Rates can be indicative of changes in other long-term
interest rates such as mortgages and long-term business loans.
 A decline in interest rates can precede increased investment spending to
promote economic growth; high interest rates can lead to lower levels of
investment and a decline in the rate of growth
How is our Economy Doing?

 The Change in Non-farm Payroll measures the number of people employed by

companies and government.
 The Department of Labor Bureau of Labor Statistics surveys approximately
390,000 establishments to count the number of people employed each month,
and the change from the previous month in the number of employed people is
reported as the Change in Non-farm Payrolls.
 Non-farm Payroll generally rises during economic growth and falls during
economic decline.
How is our Economy Doing?

 The Unemployment Rate measures the percentage of people in the labor force
who were not working during the week of the survey, but had specifically looked
for work within the previous four weeks (unless they were waiting to be recalled
from layoff, in which case they need not have been looking for work to be
counted as unemployed).
 The Department of Labor Bureau of Labor Statistics surveys thousands of
Americans each month to calculate the size of the labor force (those working
plus those not working, but seeking work) and the unemployment rate (the
unemployed divided by the labor force).
 The number of people unemployed as a percentage of the labor force is reported
each month as the Unemployment Rate.
 The Unemployment Rate generally falls during economic growth and rises during
economic decline
Answer the following

1. Explain what Real Gross Domestic Product growth statistics measure.

2. Explain what Consumer Price Index statistics measure.
3. Explain what Industrial Production statistics measure.
4. Explain what Interest Rate statistics measure
5. Explain what Change in Non-farm payroll statistics measure
6. Explain what Unemployment Rate statistics measure
7. How does knowledge of these statistics help us to understand how the
economy is doing?
8. Looking at the current data, determine if we are experiencing growth or
decline.
Assignments

 List explanations of frictional, seasonal, structural, and cyclical

unemployment in the state of New Jersey.

 Include information on the New Jersey’s and the United States unemployment
levels of the last 10 years. Draw some conclusions as to why the levels are
the way they are and how NJ’s compares to the US over time. Finally
compare these rates to the rates of unemployment in Japan.

 1 page, double spaced, times new roman, 12 pt. font, 1" margins.
Ethics in business

 You are the purchasing agent for a large furniture manufacturer. You have
received several bids from lumber companies for a supply of teak, a very
dense and decay resistant type of wood. The lowest bid comes from a lumber
company that has been known for not placing a strong emphasis on local
environmental concerns, especially resource depletion, when it cuts down
trees.
 How would the lumber company’s reputation affect your decision?
The Business Cycle

 In a market economy, there is an economic cycle, which includes four stages:

prosperity, recession, depression, recovery. There are also the four stages in
the business cycle.
 How would this cycle work in sports?
 The government and congress enact laws to influence fiscal policy
 Spending tax payer’s money and creating a “balanced” budget
 The Federal Reserve (The Fed) regulates the amount of money in circulation,
controlling interest rates, and controlling how much money banks can loan
out.
The Business Cycle

 Prosperity- low unemployment, high production of goods and services, high levels of
investment,
 Recession- 2 consecutive quarters of negative growth in the economy
 Recovery- the economy starts to grow, unemployment lowers, and production increases
 Depression- high unemployment, and low production of goods and services
 October 29, 1929 “Black Tuesday” Beginning of the Great Depression
 1929-1933 GDP fell $103B to $55B
 Unemployment went from 1.6M to 12.8M
 Wages went from $.55 to $.05
 In March 1933 a bank holiday was declared to prevent a panic
 Where are we right now???
Assignment

 Research the Tennessee Valley Authority

 What is it?
 How did it come about?
 What purpose does it serve in society today.
Assignment

 Find unemployment statistics for 1933, 1944, 1955, 1966, 1977, 1988, 1999,
2010. Present this information in an Excel graph. Explain the shape and
levels of unemployment over time and what events may have shaped our
economy

 On the Occupational Handbook web site search for the job of economist.
Write a report on possible jobs for an economist as well as salary, and future
employment opportunities. How can you prepare yourself for this occupation.
Economist Profile

 Research famous economists

 You will create a short presentation on the life of the economist including
 Biography
 Schooling
 Employment
 Economic theory/beliefs
 List of Publications
Chapter 3 Quiz

 Fill-in-the-blank
Chapter 4: Business ethics and Social
Responsibility
 Define ethics and business ethics
 Describe why ethical behavior is good for business
 List the steps for dealing with an ethical dilemma
 Define what is meant by the social responsibility of business
Key vocab

 Ethics
 Business ethics
 Code of ethics
 Sweatshop
 Conflict of interest
Business Math

 Calculating the Future value of money

 You made $4,000 one summer working various jobs. You have two options:
one spend all the money or save and invest the money.
 What are the benefits of spending all $4,000?
 What about saving and investing?
 Calculate the future value of your money assuming a 5% annually compounding
interest rate after 50 years.
 FV=PV(1+interest rate)^time
The Nature of Ethics

 What would you do if you found a copy of your final exam in the hallway?
 What would you do if you found a diamond ring in a restaurant?

 Ethics are moral principles by which people conduct themselves personally,

socially, and professionally. Business ethics are rules that guide the behavior
of a business and its employees.

 Some cultures have different ideas for ethics. In the United States, bribery is
highly illegal and unethical. In India bribery in encouraged
Laws and Ethics

 Ethics involve moral principles that govern conduct

 Laws involve rules for conduct that may be used to punish violators
 March 25, 1911 the Triangle Shirtwaist factory Company in NYC had a fire
which killed 146 workers- mostly young immigrant female workers
 Termed a sweatshop
 The Occupational Safety and Health Administration (OSHA) which is a division of
the US Department of Labor now oversees workplace safety and rules.
Assignment

 Look up how business practices and ethics are expected in the US business
world
 Now go to another country and see how the same business practices are set
up
 Some things to compare are timeliness, meeting etiquette, dress, meeting format,
and finally negotiating a deal or contract (bribe, incentives, strictly good business
practices, nepotism)
 Prepare a presentation going over the different practices and how they
compare and contrast.
 Include where you think it is easier to conduct business as well as where would YOU
personally like to conduct your business
Internet research

 Look up a code of ethics for your favorite company

 Compare and contrast the code with some one at your table.
 What do you notice is in both codes?
 What are some of the differences in the code of ethics between companies?
 Based on the code of ethics, which company would you rather work for?
Ethical Decision Making

1. Identify the ethical dilemma

2. Discover alternative actions
3. Decide who might be affected
4. List the probable effects of the alternatives
5. Select the best alternative
Social Responsibility

 Is it the duty of a business to do what is best for the good of society?

Producing goods and services that are beneficial to society and providing jobs
for people are not sufficient for a business to be considered socially
responsible. They are expected to do more.
 Some examples are that the LA times uses recycled paper and Automakers are
starting to make hybrid cars that create less emissions
 Why are businesses held to such a standard? Does the government do this? Or even
individuals?
 The Equal Pay act of 1964 requires that men and women be paid the same
wages for doing equal work
 The Americans with Disabilities Act bans discrimination against people with
physical and mental disabilities
Social Responsibility

 Employers owe it to their employees to take care of them financially and at the
work site
 At the end of the day you will always have people work for you and happiness is
directly related to retention and productivity.
 Businesses are usually based in a community and have a responsibility to help
out with the local area since it is mutually beneficial
 The real owner of the business is the shareholders, creditors, and out right
owners.
 The whole point of investing in a company is to see it get better and create value
 Companies represent their financial performance to the public so they can choose to
invest or not
 Sarbanes-Oxley Act
Social Responsibility

 In pairs, research companies with socially responsible mandates in their code

of conduct.
 I would like to know:
 What is the socially responsible act and its impact to the company and community?
 Why is the company trying to be socially responsible?
 How does this socially responsible act help/hurt the company and community?
 What are the costs to the company of being socially responsible (label intrinsic and
extrinsic costs)?
 What if the company did not do the socially responsible act? How would this
change public perception?
 1 Fun fact about the company in general.
Thematic Project

 Research trends that are affecting businesses and careers and create a
presentation about them. These trends include the rise of globalization, the
evolution of technology, and the increasing importance of cultural diversity.
 Choose a business or career that interests you
 Preview business trends that are effecting the business or career
 Research how different business trends are specifically influenced by these
changing trends
 Develop your presentation
Chapter 4 Quiz

 Concentration game
Unit 1 Essential questions

 Describe economic activity and how it affects everyday life.

 What is the difference between a “want” and a “need”?
 How do businesses satisfy wants and needs?
 Why must societies make decisions about what to produce?
 How do societies choose what to produce?
 How is economic activity measured?
 What are the phases of the business cycle?
 Why is it important for businesses to behave in an ethical manor?
 What does it mean for a business to be socially responsible?