Assessment and Activities

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2. Understanding Cause and Effect Copy the two diagrams of the production possibilities frontiers shown below. Then, write captions that explain what each diagram is showing.

EFFECT

EFFECT

EFFECT

Butter

EFFECT

Butter

Butter

Applying Economic Concepts

1. Scarcity What three choices must a society make because of scarcity?

2. Utility How is a product's utility related to its value?

3. Cost-Benefit Analysis How would you apply the concept of cost-benefit analysis to the decision to finish high school? To further your education?

Math Practice

A city administrator with a $100,000 annual budget is trying to decide between fixing potholes or directing traffic at several busy intersections after school. Studies have shown that 15 cars hit potholes every week, causing average damages of $200. Collisions at the intersections are less frequent, averaging one per month at an average cost of $6,000, although none have ever caused injuries or deaths. Use this information to answer the following questions.

1. What are the annual costs from the pothole damage?

2. What are the annual costs due to damage from collisions?

3. Given the size of the annual budget, make your recommendation as to which project should be undertaken. Explain you answer in terms of dollar benefits per dollar spent.

Thinking Like an Economist

Without using the numbers in the math practice problem above, write a paragraph describing the alternatives, trade-offs, and opportunity costs that face the city administrator. What other issues do you think are important to a cost-benefit analysis of this type?

Technology Skill

Using a Spreadsheet Keep track of your economic decisions for one week. Use your data to create a spreadsheet, highlighting your weekly spending habits.

1. In cells B1 through E1, type Food, Clothing, Entertainment, and Other. In cell F1, type Total.

2. In cells A2 through A8, type the days of the week, starting with Monday in cell A2. In cell A9, type Total.

3. In cells B2 through E2, enter the amount spent in each category on Monday.

4. In cell F2, use a formula such as =SUM(B2:E2) to calculate total expenditures on Monday. Click and drag this formula to cells F3 through F8 to find the other weekday sums.

5. Compute total expenditures for cells B9-F9.

'Building Skills

Sequencing and Categorizing Information

Identify a reasonably large purchase you recently made or are about to make. What are the trade-offs involved, and what are the criteria you use to evaluate the alternatives? On a separate sheet of paper, illustrate your decision in the form of a decision-making grid like the one below.

Decision-Making Grid

Alternatives

Criteria 1

Criteria 2

Criteria 3

Criteria 4

Practice and assess key social studies skills with the Glencoe Skillbuilder Interactive Workbook, Level 2.

APTER 1: WHAT IS ECONOMICS? 29 >

Practice and assess key social studies skills with the Glencoe Skillbuilder Interactive Workbook, Level 2.

APTER 1: WHAT IS ECONOMICS? 29 >

WORKSHOP

WORKSHOP

IN ACTION

Working with Resource Scarcity

Douglas Ide

Mt. Ararat High School

Topsham, Maine

Our resources are limited while our wants are relatively unlimited. In this workshop, you will experiment with methods to overcome the problem of scarcity. You will also answer the three fundamental questions of economics: what to produce, how to produce it, and how to distribute what you produce. Finally, you will analyze why it is important to determine the answers to these questions.

Setting Up the Workshop

For this activity you will need:

• small paper "lunch" bags

• miniature chocolate bars

• marshmallows

• graham crackers

Procedures

STEP 1

Review the concept of scarcity with your group. Remember that scarcity is the economic term that describes a situation where there are not enough products available to satisfy people's needs or wants. Discuss why scarcity always exists.

STEP 2

Review the concept of production. Note that production—the creation of goods and services—requires four factors.

The Four Factors of Production:

• Natural Resources

Entrepreneurship

STEP 3

Your teacher will provide you with your group's "resources." Do not open the bag.

30 UNIT 1 FUNDAMENTAL ECONOMIC CONCEPTS

STEP 4

Read and discuss these instructions:

This bag contains your resources. You must use these resources and no other, but you may use them in any way you choose. The resources are exactly what they appear to be: chocolate, marshmallows, and graham crackers; they may not be used to represent anything other than that.

STEP 5

Open your bag and study the contents. Discuss what item or items your group can produce with these "resources." Due to scarcity, your group may have difficulty in producing one complete unit of "product" for each group member.

STEP 6

Compare the available resources in your bag to the "demand" for the finished product. How many units can be produced? How will you produce them? How will you distribute them? (e.g. Will each member of the group receive a completed unit, or will only some of the members receive the product? If not everyone receives one, how will you determine who receives one?)

Summary Activity

Once you've produced the product, answer the following questions. Take notes as you determine the answers.

1. What was your first thought when you opened the bag and examined the amount of resources?

2. What did you then have to decide?

3. Why did you have to think about how to produce them, and how they would be distributed?

4. Were each of the four factors of production used in making your product?

5. What resources were used?

6. What type of skills and tools did the workers need?

7. Create a chart showing the factors of production that are combined into different consumer products that the members of your group buy.

UNIT 1 FUNDAMENTAL ECONOMIC CONCEPTS 31

CONTENTS

Economics & You

Cln Chapter 2, you will |1 I learn how economic systems differ and what makes up the major characteristics of the United States market system. To learn more about how economic systems operate, view the Chapter 3 video lesson:

Economic Systems and the American Economy u

A wide range of choices is characteristic of a market economy.

IC0BiS

Chapter Overview Visit the Economics: Principles j and Practices Web site at epp.alencoe.com and click on Chapter 2—Chapter Overviews to preview chapter information.

CLICK HERE

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Responses

  • brigitte
    How would you apply the concepts of cost benefit analysis to the decision to finish high school?
    8 years ago
  • Lee
    How would you apply the concept of cost benefit analysis to the decision to finish high school?
    8 years ago
  • RHIANNA
    What are the annual costs from the pothole damage/math practice?
    8 years ago
  • tarja
    WHEN TO PRODUCE in economic concepts?
    8 years ago

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