ECONOMICS
DESCRIPTIONOFSESSION
Inthissession,participantswillgainabasicunderstandingofeconomics.Learningabouttheeconomywillhelp
participantsdevelopfinancialawarenessthatwillbebeneficialthroughoutlife.
CATEGORY
• Business
• CollegeandCareerPrep
OBJECTIVES
Bytheendofthissession,participantswillbeableto:
• Understandwhateconomicsisandwhywestudyit.
• Explainthefactorsofproduction.
• Describethedifferentformsofeconomicutility.
SUPPLIES
• 2largebagsofM&M’sorSkittlescandies
• Bowl
• FactorsofProductionactivitysheet—makeacopyforeachparticipant
• Writingutensils
• Internetaccess
ADVISORNOTE:Textinitalicsshouldbereadaloudtoparticipants.Asyouengageyourpostinactivitieseach
week,pleaseincludecomments,discussions,andfeedbacktothegrouprelatingtoCharacter,Leadership,and
Ethics.Theseareimportantattributesthatmakeadifferenceinthesuccessofyouthintheworkplaceandin
life.
ACTIVITIES
OpeningActivity
CandyLove
BeginbyemptyingthebagsofM&MsorSkittlesintoabowl.Makesureyouhaveenoughforeveryonetohave
atleastfivecandies.Writedownonawhiteboardorposterboard(ifavailable)orannouncewhateachcolor
signifiesfromthelistbelow.Youmayneedtovarythecolorsoraddcategoriesdependingonwhichtypeof
candyyouchoose.Passthebowlaroundthecircle,havingeachpersonchooseonecandyandsharebasedupon
thecolorpicked.ItisOKifparticipantspickthesamecolormorethanonce.
• Yellow—alifegoalyouareworkingon
• Green—yourfavoritebookormovie
• Orange—yourfavoritefood
• Blue—somethingthatcausesyoustress
• Purple—yourfavoritesporttoplayorwatch
• Red—somethingyouloveaboutschooloryourjob
Activity1
IntroductiontoEconomics
TellExplorers:Economicsisthestudyofhowindividualsandbusinessesmakedecisionstobestsatisfywants,
needs,anddesireswithlimitedresourcesandhowefficientlyandequitablyresourcesareallocated.
Amongthebasicconceptsofeconomicsaresupply,demand,andmarketprice.Supplyreferstohowmuchofa
productorserviceisavailableforpurchaseatanygiventime.Theamountsuppliedwillincreaseastheprice
increases.Demandreferstohowmuchpeoplewanttobuyatanygiventime.Theamountdemandedincreases
asthepricedecreases.Themarketpriceforaproductorserviceisthepriceatwhicheveryonewhowantsthe
itemcangetitwithoutanyonewantingmoreorwithoutanyoftheitembeingleftover.
Ask:WhyiseBayagreatexampleofsupply,demand,andmarketprice?Thediscussionshouldincludethe
followingpoints:Becausebiddersstatethepricetheyarewillingtopayforaparticularitem.Thepriceincreases
dependingonthedemand:Thegreaterthedemand,thehigherthepricebiddersarewillingtopay.Supplyalso
affectspriceoneBay:Ifsimilaroridenticalitemsareavailableforauction,thepriceiskeptlower.Whena
uniqueitemisauctioned,pricestendtobehigherbecausedemandishigherandsupplyislower.Eventually,the
winningbidestablishesthemarketprice.
Activity2
FactorsofProduction
Say:Tofullyunderstandhowabusinessoperates,youhavetoconsiderthefactorsofproduction,theresources
usedtoproducegoodsandservices.Themostimportantfactorsarelabor;land,alsoreferredtoasnatural
resources;andcapital.Otherfactorsareentrepreneurs,intellectualproperty,andtechnology.Laboristhe
humanresourcethatreferstoanyphysicalorintellectualworkpeoplecontributetoabusiness’sproduction.
Naturalresourcesaretherawmaterialsusedtoproducegoodsandservices.Soilusedinagriculturalproduction,
treesusedforlumbertobuildhouses,andcoal,oil,andnaturalgasusedtocreateenergyareallexamples.
Therearetwotypesofcapital—realcapitalandfinancialcapital.Realcapitalreferstothephysicalfacilities
usedtoproducegoodsandservices.Financialcapitalismoneyfromloans,investors,fundraising,andpersonal
savings.
Entrepreneurialtalentisalsoessentialtothesuccessofabusiness.Entrepreneursarepeoplewhoassumethe
riskofcreating,organizing,andoperatingabusinessanddirectallthebusinessresources.Entrepreneursarea
humanresource,justlikelabor,butwhatsetsentrepreneursapartfromlaboristheirwillingnesstobearrisks
andtheirabilitytomanageanenterprise.Intellectualpropertyreferstotheownershipofideasandcreative
worksintheformofpatents,copyrights,andtrademarks.Intellectualpropertycreatesacompetitiveadvantage
fordrugcompaniesthatownpatentsonapopularandeffectivedrugaswellasfortechnologycompaniesthat
ownpatentsonhardwareandsoftware.Finally,technologyreferstoitemsandservicessuchassmartphones
andsoftwarethatmakebusinessesmoreproductive.
ProvideeachExploreracopyoftheFactorsofProductionactivitysheet.Workinginteamsoftwoorthree,have
themidentifyexamplesofeachofthefactorsofproductionforthebusiness.Givethem10to15minutestodo
soandthenreviewasagrouptoensuretheirunderstanding.Explorersmayusetheinternettoassist,if
available.
Activity3
EconomicUtility
Therearefourtypesofeconomicutility,orvalue,thatcustomersreceivefromgoodsorservices.Theseareform,
time,place,andownershiporpossession.Whenacompanyproducesaproductfromrawmaterialsinaform
thatpleasesthecustomer,itcreatesformutility.Whenthebusinessmakesaproductavailablewhenitis
needed,itcreatestimeutility.Whenaproductyouwanttobuyisstockedatyourlocalstore,thestorecreates
placeutility.Whenthestoresellsaproduct,ittransfersownershipfromthestoretothecustomer,creating
ownershiputility.Thebuyerderivessatisfactionfromowningtheitem.
Initiateadiscussionaboutthetypesofutilities,namingsomeproductsandhavingparticipantsidentifythe
utility,orvalue.Forexample,formrelatestofinishedproducts.Consumersbuyfinisheditems,suchasvehicles
andelectronics,sotheydon’thavetogatherthepartsandputthemtogetherthemselves.Timereferstowhen
anitemisneeded,suchasdecorationsforholidaysorclothingforcertainweatherconditions.Placerefersto
whereanitemcanbepurchased,andownershipisthevalueconsumersplaceonowningtheproductandusing
itasintendedorinanewway.
REFLECTION
Somesamplequestionsarebelow.Theyaredesignedtohelptheparticipantsapplywhattheyhavelearnedto
theirowninterests.Youarewelcometousethesequestionsordevelopyourownquestionsthatrelatetoyour
postorspecificfocusarea.
• Howcanthisinformationbeappliedinyourdailylives?
• Whymusttheutilitiesbeconsideredwhenacompanyisintroducinganewproduct?
• Isthereanythingthatyouneedmoreinformationonorwereunclearabout?
• Whyisthistopicimportant?
ADVISORANDOFFICERREVIEW
Afterthemeeting,addressthefollowing:
§ Identifywhatwassuccessfulaboutthemeeting.
§ Identifywhatneededimprovement.
§ ScheduleanofficerandAdvisorplanningmeetingtoprepareforthenextpostmeetingoractivity.
(MuchofthecontentinthislessonisfromBetterBusiness,4thed.,byMichaelR.Solomon,MaryAnnePoatsy,
andKendallMartin,©2015byPearsonEducation.Usedwithpermission.)
RESOURCES
Activity2
FactorsofProduction
FactorsofProduction
Youaregoingtoopenabarbershoporsalon.Considerthedifferenttypesofservicesthatthiskindofbusiness
mayoffer.Fillineachoftheboxesbelowwithanexampleofthefactorofproduction.
1. NaturalResources
2. Labor
3. Capital
4. Entrepreneurs
5. IntellectualProperty
6. Technology