Ms Butcher's Learning Environment

 

Handout 1:  What is Economics?

Economics is concerned with identifying and clarifying the range of choices individuals face now and in the future due to scarce resources.  Economics is often thought of as “too theoretical” to be useful in everyday life.  This is not true, however, because each day everyone thinks like an economist without knowing so.

Directions: The excerpt below is written by economics professor Steven Landsburg, who clarifies how daily choices are related to the study of economics.  Read the passage below, and then answer the questions that follow.

Economics is about facing difficult choices: earning income versus enjoying leisure, splurging today versus saving for tomorrow; developing new skills versus exploiting the skills you’ve got; searching for the perfect job (or the perfect marriage partner) versus settling for the one that’s available…

One of the greatest lessons of economics is that there is no single best way to resolve such choices; everything depends on circumstances; what’s right for you can be wrong for your neighbor.  Economics is the science of tolerance.  Good economics professors teach their students that people can live very differently than you do without being either foolish or evil…

Economics breeds not just tolerance but

compassion.  The economist’s method is to observe behavior closely, the better to understand other people’s goals and other people’s difficulties.  That kind of understanding is the basis of all compassion…

Economics is about more than just individual choices.  It’s also about social choices: rewarding initiative versus promoting equality; preserving freedom versus preserving order; providing opportunities for the masses versus providing a safety net for the less fortunate.  In other words, we want to ask what is right?  What is just?  What is fair?  My daughter is keenly interested in the same questions, more concretely posed: Is her allowance an entitlement or a reward for a clean room?  Should she be free to ignore her parents’ advice and wear a summer jacket on a winter day?  Should she and her friends choose a video that most of them love or a video that none of them hates?  Evert time a child cries “That’s not fair”, a parent is forced to confront some issue of economic justice.

 

Source: Fair Play: What Your Child Can Teach You About

Questions:

1. What is Professor Landsburg’ definition of economics?
2. Landsburg claims, “economics is about more than just individual choices.  It’s also about social choices.”  What are two specific examples of social choices that Landsburg identifies? 
3. What are a couple of economic choices that you have recently made?

Handout 2:  Reference for Guided Notes:  The Study of Economics

I.                    Economics is the study of how people satisfy their wants with scarce resources.

 

                                                        i.            Microeconomics: approaches the study of economics from the viewpoint of individual households and firms

 

                                                      ii.            Macroeconomics: approaches the study of economics from the viewpoint of the economy as a whole (households, firms, government, the rest of the world)

 

II.                 The fundamental economic problem- scarcity:

 

i. Scarcity is the condition of having unlimited wants and limited resources.

 

1.      “Resource” has a particular meaning in economics: it is something that is used to produce something else. 

 

a.       Productive Resources (a.k.a. factors of production or resources)

 

                                                                                                                                      i.      Natural resources (forests, land, minerals, oil reserves, water, animals, etc.)

 

                                                                                                                                    ii.      Human resources (mental and physical)

 

                                                                                                                                  iii.      Capital resources (the means by which something is produced, e.g. money, buildings, machines, factories & technology)

 

                                                                                                                                  iv.      Entrepreneurs (risk-takers who combine the land, capital, labor into new products)

 

                                                            ii.      Resources are “scarce” for the simple reason that there is not an unlimited supply of time, people, land, and so on. 

 

                                                          iii.      Discussion question: Why do you think scarcity is an issue with the rich as well as the poor?  Answer: It is a human trait that few people, regardless of their economic status, are satisfied with what they have. 

 

III.               Each nation in the world has something fundamental in common with all other nations: each has to decide how to answer the three economic questions.

 

                                                              i.      What is produced?  This is an allocation question. Society must choose based on its needs.

 

                                                            ii.      How is it produced?  This is an efficiency question. Society must choose based on its resources.

 

                                                          iii.      For whom should we produce?  This is a distribution question.  Society must choose based on its population and other available markets. 

 

                                                          iv.      The way in which a society answers these three economic systems defines its economic system.

 

                                                            v.      Discussion question: How might the economic decisions of an island society differ from those of a landlocked society?  Answer: An island society has water resources to consider and likely a smaller population. 

 

IV.              The Scope of Economics

 

                                                              i.      Economists analyze how our economy is performing and how to adjust economic growth- using GDP, unemployment rate, tax rates, etc. to do so 

 

                                                            ii.      Economists analyze the “why” and “how” of economic activity- why prices go up and down, or how taxes affect savings

 

                                                          iii.      Economists use theory to show how yesterday’s and today’s economic activities will affect potential future activity- how government spending today may affect the National Debt

 

V.     Thinking Like an Economist

 

                                                              i.      Economists create economic theories to make predications about the real world.

 

1.      Economic theory: a simplification of an economic reality that is used to make predictions about the real world.

 

2.      The more detail= more difficult to understand and less useful

 

3.      Other-things-constant assumption (Ceteris Parabis): the idea to identify the variables of interest and then focus exclusively on the relationships among them, assuming nothing else of importance changes

 

                                                            ii.      Marginal Analysis

 

1.      MARGINAL= incremental, additional

 

2.      Economic choice is based off of comparing the marginal benefit to the marginal cost (marginal analysis)

 

3.      A rational decision maker will choose to do something as long as the expected marginal benefit exceeds the marginal cost.

 

 

 

 

Source: Adapted from Daily Lecture Notes for Glencoe "Economics Principles & Practices.” New York: Glencoe McGraw-Hill, 2004.

 

Handout 1: Breaking Social Norms in Society

 

Instructions:  Read the article and write a response to it. (a paragraph)

 

Social norms are shared expectations about what kinds of behaviors are and are not acceptable.  These are not actual rules because you cannot get in actual legal trouble for breaking them.  However, breaking social norms can make people very uncomfortable and can hurt the social lives of those who do it.

For example, there is no rule against members of the same sex walking down the street holding hands.  However, in my small town, anyone will get a reaction from people who see them.  This leads people who do that (I have only ever seen it a couple of times) to get stares from other people and to have others avoid them.

 

As another example, an acquaintance of mine likes to tell groups (even if there are people who are not close friends of hers) too many things.  I was at a play group for our kids with her and she told us all about how her second child was conceived in the back of their minivan in a park.  This was, as people say, "too much information."  By acting in this way, she tends to incur social sanctions and people often avoid engaging in conversations with her.

 

Breaking social norms does not have any legal consequences, but it can have a major impact on a person's social life because it can make people very uncomfortable being around them and can mark them as "weird" and different.  In terms of events that "break" social norms and how people will react to them, each circumstance is different.

 

For example, allowing cell phones in restaurant, when it began, was a break with the social norm. Most people would go out to dinner to relax and enjoy a meal cooked away from home, and often the companionship of friends. Loud and rowdy drunks were frowned upon, as were screaming children and rude and/or obnoxious groups of people...generally in a nice restaurant (as opposed to a fast-food place). However, now people bring their cell phones with them. The phones may ring continuously or conversation may be so loud that it makes it difficult to enjoy your meal. I have seen and heard about different reactions. Some people ask to be moved to another location; some people will leave the restaurant and not order dinner. Sometimes, people find the behavior so unbearable that they say something to the other diner.

Another situation we have seen are the no-smoking laws that have been enforced across the country. This has been very difficult for smokers, who may have tried to quit or find smoking relaxing. For those of us who do not smoke, it is a relief, but it creates a struggle on the part of smokers. Some smokers have reacted with anger and frustration.

 

If you are looking for a potential problem within society, tell a nation that guns are no longer legal, or abortions are banned. The uprising would be fierce and furious. People feel very strongly about some things. The nation is already divided on these two issues, but changing the laws to favor one stance over another would result in wide-spread protest, and perhaps even violence.

 

Looking to the past and our country's decision to make slavery illegal ripped the country apart and caused a war: it needed to be done, but it divided not only the nation, but families as well. When young men started to be drafted into the Vietnam War, there were nationwide protests, young men and/or their families moved to Canada to avoid going to war, and the nation was divided as to the necessity and the ethical reasoning to become involved in that particular "war." This, too, destroyed families and turned the public against the government.      All of these examples provide instances of broken social norms.

 

While it is true that breaking social norms has no legal recourse and that social norms do change with time, there certainly always exists and has existed consequences for breaking social norms. I think the blanket answer is that the person is ostracized from society. Historically this was a literal removal or banishment of the person from the socially geographically. At worst those who couldn't or wouldn't conform were banished and at best forced to live literally on the fringes of society (the edges of towns or cities).

Today while the ostracization may not be geographical it is certainly still the consequence. When you break social norms, people stop associating with you. You may lose your job. You may be kicked out a homeowners association or other group. You end up alone, ostracized because society is not comfortable with your behavior and therefore wishes it to go away.