Economic Understandings

SS4E1
Use the basic concepts of trade, opportunity cost,
specialization, voluntary exchange, productivity, and
price incentives to illustrate historical events.
 Hi! My name is Mrs.
Econ and today I am
going to teach you about
economics.

 Economics is the study

of the making, buying,
and selling of goods or
services.
 Barter-Trade  When the 13 colonies
were founded, some
I have 5 rabbits to people were good
trade. Want to trade hunters, some were
with me? craftsmen, and some
were farmers.
 In order to get things
that a person needed to
survive, one person
might have traded one
item for another item.
 This is known as
voluntary exchange.
 What is voluntary exchange?
Yes. I will trade my  People will trade if they
milk and eggs for both get something from it.
your rabbits.
 The lady trades a jug of
milk and 3 eggs for 5
rabbits.
 She needs the rabbits to
make rabbit stew.
 She’ll use the rabbits’ skin
to make a fur cap.
 The man’s family needs
milk and eggs.
 Let’s review voluntary exchange.
 Voluntary exchange
helps both buyers
Both
and parties
sellers.

must
Voluntarybenefit
exchange
was used in the
I’ll make your I’ll give you 4
farming tools crates of apples from
systemthe trade.
of colonial
for 4 crates of for farming trade. (barter)
apples. tools.  The colonists
swapped goods that
they had for things
they needed.
 Trade was very important after
the Revolutionary War ended.

Under
This the out
turned Articles
to beof Confederation,
a big Congress
problem among the
had nostates.
thirteen power to make laws about trade.
 How was this a problem?

• Each state wanted to control their own trade. They

tried to make big profits.
• Each state made their own money. Sometimes they
would not accept another state’s money.
• Most foreign countries would not trade with the
United States because the 13 states could not get
along with each other.
How did they solve these
economic problems?
 Thanks goodness they
wrote the U.S. Constitution!
 The Constitution says that
the federal government
controls trade between the
states and with foreign
countries.
 The state government
controls trade within its own
state.
1. Who is the United  Canada
States’ Number 1
trading partner?

2. Can you name one of the most

important industries trading between
Canada and the U.S.A.?
(It’s big in Japan and Korea, too.
Your family probably uses this every day!)
 Automobiles
Basic Economics
$ Choices Cost You!
$
 We have to make economic choices
every day.
 Some choices are easy because they’re
not very expensive.
 Some choices are hard because they
cost a lot of money.

$ $ $ $
Examples of Daily Choices
(Cost a small amount of money)
Examples of Hard Choices
(Involves a lot of money)
Opportunity Cost
 Opportunity cost is the value of what
is given up when a choice is made.
 Every time you make a choice, you give
up something else.
 You might decide to watch TV instead
of washing a neighbor’s car to make
some money.
 Your opportunity cost is the money
you could have made washing the car!
 Making Choices
All choices require giving up something
 A farmer decides to  His opportunity cost
grow corn instead of is the tomatoes he
tomatoes. could have grown.
 Making Choices
All choices require giving up something
 A girl decides to  Her opportunity cost
babysit instead of is the time she could
going roller skating have had with her
with her friends. friends roller skating.
 Making Choices
All choices require giving up something
 A dad decides to  His opportunity cost
watch his son’s is the money he could
soccer game instead have earned fixing the
of earning some computer.
extra money fixing
the neighbor’s
computer.
 Let’s sing a song about
Oh Give Me a Choice
choice and opportunity
(Tune: Home on the Range)
cost.
Oh give me a choice,
Oh, a difficult choice,
And I’ll think about what I could use.
I’ll have to decide,
With my eyes open wide,
What I’ll give up and what I will choose.
Opportunity cost!
It’s the thing you give up when you choose.
It’s the price that is paid
When a choice must be made.
It’s the thing that I surely will lose.
 Leaders throughout history have had to
make choices that involved opportunity cost.

 The kings and queens  Their opportunity

decided to spend cost was the money
money to search for a that could have be
short cut to Asia. They used for important
paid for ships, supplies, things at home or to
and manpower. trade with other
countries closer to
home.
How do price incentives affect
people’s behavior and choices?
 A price incentive is used to affect
people’s buying behavior.
50% off

 Incentives can motivate people to take

action!
SALE
 An offer for “Buy one pizza, get one
TODAY
free,” is a price incentive.
 A sale where items are ½ price is a
price incentive.
Colonial Choices

 The behavior and choices of people in

colonial times were affected by price
incentives, too!
 What would make them the most
money?
 That extra money was an incentive for
colonists to grow, make, or build more!
 Specialization in the
New England Colonial Region

 People in New England specialized in:

– fishing
– lumber
– shipbuilding

 New England had harbors that made it a

shipping trade center.
Specialization in the
Mid-Atlantic Colonial Region
 The Mid-Atlantic colonies had rich
farmland.
 Farmers produced large harvests of:
– wheat
– rye
– corn
 They also raised livestock.
 They worked with iron (blacksmith)
 Specialization in the
Southern Colonial Region
 Agriculture was king in the South.
 There were small farms and big plantations.
 It was profitable to grow:
 tobacco

 indigo

 rice

 cotton

 Slave labor was used to plant and harvest

crops.
 Productivity during the late
18 and early 19 centuries
th th

 Technology Rocks!
– Talented Americans developed new
inventions that changed our lives!
 There were many technological
advancements!
 A few important examples include:
 Spinning machines &
Sewing machines

 Spinning machines made cloth very quickly.

 Sewing machines could make clothes quickly.
 Cotton Gin

 Eli Whitney’s cotton gin was a simple machine that

separated seeds from the cotton fibers.
.
 It increased the production of cotton tremendously.
 Cotton became the most important crop in the South.
 More slaves were needed to work in the cotton fields.
 Telegraph

 Samuel Morse’s telegraph was the first

method of long-distance communication.
 Americans and businesses could finally
communicate over long distances!
Steamboat

Robert Fulton’s steamboat allowed people and

goods to travel much faster along the nation’s
rivers and canals.
Steam Locomotives

 Steam locomotives helped Americans move

goods and people across the country.
 Canals

 Canals paved new paths for steamboats.

 People and goods traveled faster from
lakes, rivers and the ocean through
canals.
Railroads

 Railroads made new paths for trains.

 Goods and people could travel from
place to place much faster.
Productivity increased with these new
inventions:

Manufacturing - Factories

 Manufacturing is the process of

making goods using machinery.
Assembly Lines
Assembly Line

 The assembly line is where products

are put together as they pass down a
line of equipment and workers.
Mass Production

Mass Production

 Mass production is making goods in

large amounts by machinery and special
methods.
•This completes my lesson on
economics!
•Economics is an important part of
our lives.
•You use economics in many ways
everyday.
 References
 Text Information:
 4th Grade Student Workbook: “Section 4, Economic
Understanding,” Available www.georgiaexperience.com,
Copyright 2005, Carole Marsh/Gallopade International.
Advanced Network and Services, Inc.
 The Economic Songbook: Old Tunes with an Economic
Twist. “Oh Give Me a Choice!” Copyright 1997, Martha C.
Hopkins. James Madison University Center for Economic
Education.
 Graphics Information:

 Microsoft Clip Gallery 3.0 (no sitations)

 #1 Free Clip Art. [Online Graphics]. Available
www.1cli[part.com/ Copyright 1999 #1Free Clip Art