In this lesson, we will be learning about what we need. If you think about that for a second, many things will come to mind. Think about the things in your daily life. What do you really need? Do you need a TV? Do you need a computer? How about clothing or food?
Students will be able to understand and analyze comprehensive economic systems.
What is economics?
How do economics affect our daily life?
In order to learn about economics, we first need to officially define what it is. Economics is the study of the production, distribution and consumption of goods and services. We're going to pose a couple of questions at this point. Who is doing the consumption and who is producing it? Think about that, and we will touch on it during this lesson.
Now that we have the definition figured out, let's break it apart one by one. We're going to start with production. Of course when we talk of production, we're actually referring to the production or making of goods. So it's a fair assessment to say these two definitions go hand in hand.
Capital is anything used in the production of goods. CPI stands for consumer price index and is used to measure inflation. The Federal Reserve Bank can have an affect on inflation because they set the interest rate which in turn affects our economy directly. To increase economic activity, the government lowers taxes. To lower the economic activity, they raise taxes.
You might think that when you buy something at the store, then that store gets all the money or profits from the sale. That's not true. See, there is money invested into every product, so a profit is the total revenue minus the total cost.
In economics there is either the consumer or the supplier. The consumer would be you the customer. That's a great way to think about consuming, associate it with customer. You are the customer when it comes to purchasing goods. The supplier does just that. They supply you with the goods to purchase. The question to now ask is this, "What determines what they supply?" The answer is: YOU! The consumer determines the product demand. When you make purchases, you are affecting the market. So in turn the market determines economic decisions between supply and demand. Lets look at an example. We'll say that everyone wants to buy two gallons of milk at a time. The more milk you buy, the more milk is needed. There is the connection to economics. That was a great example of supply and demand. Can you think of an example?
When purchasing goods and services, we use currency. Currency is defined as the money used to purchase goods or services. We of course use the dollar. The dollar isn't used very much, of course, when the country is in a depression. A depression is well, depressing. It is a severe economic downfall resulting in the loss of jobs and the closing of businesses. The Great Depression occurred in 1929. The stock market crashed or went down completely. This marked the beginning of a decade long problem of poverty and unemployment. The stock market is a private or public market used for the trading of company stock at an agreed price. The stock market is the main source of trading in the United States.
How have you been a consumer today?
Clothing - pajamas, footwear, socks, underwear, hat, clothes worn at school.
Transport - car, school bus, bicycle, train.
Food - what has been eaten by the you today? List all the of the food and beverages consumed by you.
At Learning - pens, pencils, books, balls, desks, computers.
“Consumers use either goods or services.”
Goods are items you can actually touch and include things like clothing, food or toys. Services include bike repairs, receiving a hair-cut or your house being supplied by electricity. These are services provided to consumers by others.
Needs from Wants
Wants - things that we can live without, but like to have.
What determines our needs and wants?
We have different wants and needs because of factors including age, health, occupation, environment, location, culture and beliefs. Our needs and wants can change. For example, our needs and wants will change if we:
Take me out to the ballgame!
This is going to be a super fun and involved activity for you to do. You're going to be going to the ballgame. When you think about going to the game, what do you think about needing while there?
The best thing to do is make a list of everything you will need. For example: A ticket: How much will that cost? Well you will have to decide how much money you really want to spend on that portion of your game. The better the seats, the higher the cost. What will you need to eat? What will you need to drink? How will you choose to get there? Will you need souvenirs?
There is a chart below that you will use to determine what you need. You will be given $50. Spend it wisely. The question that will at hand is: Did you need everything you bought? Do you have money left over? Do you have enough to get home? Have fun!
With this activity you will make a list of the things you need each day. Starting from the beginning is best with this activity. So, for example, we'll say that you get up in the morning so you need a bed.
Your basic needs are a great example of economics. You need to make sure your list has things like: clothing, food, shelter, water.
I am a Consumer:
We all have different Needs and Wants. They will vary from person to person.
Wants – things that we like to have but do not require for a basic living by today’s standards
2. Talk with your family about which items are Needs (N) and which items are Wants (W).
3. Place a N next to each purchase you considered a Need and a W next to each Want.
4. What did you find about your supermarket receipt list?