Economic

Understandings
Use the basic concepts of trade, opportunity cost,
specialization, voluntary exchange, productivity, and price
incentives to illustrate historical events.
 Economics is the study of
the making, buying, and
selling of goods or
services.
 Barter-Trade  When the 13 colonies were
founded, some people were
I have 5 rabbits to good hunters, some were
trade. Want to trade craftsmen, and some were
with me? 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 both
milk and eggs for 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 and
sellers.
Both parties
 Voluntary exchange
must
was usedbenefit
in the system
I’ll make your I’ll give you 4
farming tools crates of apples from
(barter)
the
of colonial trade.
trade.
for 4 crates of for farming
 The colonists swapped
apples. tools.
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 is

grow corn instead of the tomatoes he could
tomatoes. have grown.
 Making Choices
All choices require giving up something

 A girl decides to  Her opportunity cost is

babysit instead of the time she could have
going roller skating had with her friends
with her friends. roller skating.
 Making Choices
All choices require giving up something

 A dad decides to watch  His opportunity cost is

his son’s soccer game the money he could
instead of earning some have earned fixing the
extra money fixing the computer.
neighbor’s computer.
 Leaders throughout history have had to make
choices that involved opportunity cost.

 The kings and queens  Their opportunity cost

decided to spend money
to search for a short cut
to Asia. They paid for
ships, supplies, and
manpower.
was the money that
could have be used for
important things at
home or to 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.

 Incentives can motivate people to take action!
 An offer for “Buy one pizza, get one 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
18th and early 19th centuries
 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.
 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