Unlocking Economics: Scarcity, Trade-offs, and the Power of Models

Economics Grades High School 2:42 Video
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Lesson Description

Explore the fundamental principles of economics, including scarcity, opportunity cost, supply and demand, and the use of economic models. This lesson introduces students to thinking like an economist.

Video Resource

Intro to Economics - Course Trailer

Khan Academy

Duration: 2:42
Watch on YouTube

Key Concepts

  • Scarcity
  • Opportunity Cost
  • Supply and Demand
  • Comparative Advantage
  • Economic Modeling

Learning Objectives

  • Define scarcity and explain its implications for economic decision-making.
  • Explain the concept of opportunity cost and apply it to real-world scenarios.
  • Describe the basic principles of supply and demand and their impact on prices and quantities.
  • Understand the concept of comparative advantage and its role in promoting trade.
  • Explain the purpose and value of economic modeling.

Educator Instructions

  • Introduction (5 mins)
    Begin by asking students what they think economics is about. Show the Khan Academy video trailer 'Intro to Economics - Course Trailer'. Briefly discuss the video's overview of the course.
  • Key Concepts (15 mins)
    Define and discuss the following key concepts, using examples: * **Scarcity:** Explain that resources are limited, but wants are unlimited. This forces us to make choices. * **Opportunity Cost:** Explain that every choice has a cost – the value of the next best alternative forgone. Ask students for examples of opportunity costs in their own lives (e.g., studying vs. watching TV). * **Supply and Demand:** Introduce the basic idea that the price of something is determined by how much of it is available (supply) and how much people want it (demand). * **Comparative Advantage:** Explain that countries (or individuals) should specialize in producing goods and services where they have a lower opportunity cost.
  • Economic Modeling (10 mins)
    Discuss the importance of economic models. Explain that models are simplified representations of reality that help economists understand complex phenomena. Emphasize that models are based on assumptions, and it's important to understand those assumptions. Relate to Sal's discussion on how models can have both mathematical components and also human elements, making them not always predictable.
  • Class Discussion (10 mins)
    Facilitate a class discussion using the discussion questions below.
  • Interactive Exercise (10 mins)
    Complete interactive exercise.

Interactive Exercises

  • Opportunity Cost Calculation
    Present students with a scenario (e.g., choosing between a job offer and college). Have them list the costs and benefits of each option and identify the opportunity cost of choosing one option over the other.

Discussion Questions

  • What are some examples of scarcity that you see in your daily life?
  • Can you think of a time when you made a decision and considered the opportunity cost?
  • How do you think supply and demand affect the price of goods and services that you buy?
  • Why do countries trade with each other? What are the benefits and drawbacks of trade?
  • Why is it useful for economists to create models?

Skills Developed

  • Critical Thinking
  • Economic Reasoning
  • Problem-Solving
  • Analytical Skills

Multiple Choice Questions

Question 1:

The fundamental economic problem that arises from limited resources and unlimited wants is known as:

Correct Answer: Scarcity

Question 2:

The value of the next best alternative that is forgone when making a decision is called:

Correct Answer: Opportunity Cost

Question 3:

Which of the following is a basic question that all economic systems must answer?

Correct Answer: What goods and services to produce?

Question 4:

The relationship between the quantity of a good or service that consumers are willing and able to buy and the price is known as:

Correct Answer: Demand

Question 5:

Specializing in the production of goods and services where you have a lower opportunity cost is called:

Correct Answer: Comparative Advantage

Question 6:

A simplified representation of reality used to understand complex economic phenomena is called a(n):

Correct Answer: Economic Model

Question 7:

If there is an increase in demand for a product, what is likely to happen to the price of that product?

Correct Answer: Price will increase

Question 8:

If a country is MOST efficient at producing a good, this is called:

Correct Answer: Absolute Advantage

Question 9:

According to the video, economics is called the 'dismal science' because:

Correct Answer: It studies human behavior and uses math

Question 10:

What happens to opportunity costs when scarcity increases?

Correct Answer: Opportunity cost gets higher

Fill in the Blank Questions

Question 1:

The condition of limited resources in relation to unlimited wants is called ________.

Correct Answer: scarcity

Question 2:

The value of the next best alternative forgone is called ________ ________.

Correct Answer: opportunity cost

Question 3:

The academic field of __________ is studying how things should be allocated when there's not enough for everyone.

Correct Answer: economics

Question 4:

__________ and __________ are important factors in economics that determine price.

Correct Answer: Supply and Demand

Question 5:

__________ __________ is when you produce goods and services where you have a lower opportunity cost.

Correct Answer: comparative advantage

Question 6:

Economists develop _________ to help them understand complex phenomenoa.

Correct Answer: models

Question 7:

Economists try to think __________ about things, by using models.

Correct Answer: systematically

Question 8:

In addition to using math, economics is similar to __________ because we are talking about how humans act.

Correct Answer: humanities

Question 9:

Khan Academy provides free lessons on economics at __________.

Correct Answer: khanacademy.org

Question 10:

Economists make __________ when they create models, which are not always true.

Correct Answer: assumptions

Educational Standards

SOC.9-12.E.1:develop and apply economic reasoning and decision-making skills. SOC.9-12.E.1.1:Define and apply basic economic concepts of money supply, scarcity, surplus, choice, opportunity cost, cost/benefit analysis, risk/reward relationship, incentive, disincentive, and trade-off to a variety of economic situations. SOC.9-12.E.3:explain how prices are set in a market economy and will determine how price provides incentives to buyers and sellers.

Teaching Materials

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