Biblical Integration

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Pump Primer

What do you think of when you hear the
term “economics?”
(Carper, 1)
“ECONOMICS for Christian
Schools”
By Alan J. Carper
Bob Jones University Press. 1998
Unit 1: What Is Economics?
Chapter 1 Part I
Economics: The Science of
Choice
Production Possibility Frontier
and Graphs
Chapter Objectives:
Define economics.
 Explain why choices are necessary.
 Explain how a Christian’s and an unbeliever’s
perspective of economics differ.
 Differentiate between economic goods and
services, nuisance goods and free goods and
services.

Contrast the concepts of intrinsic and
subjective value.
 Describe the opportunity benefits and
opportunity costs of a purchase.
 Differentiate between microeconomics and
macroeconomics.
 Differentiate between positive and
normative economics.

Biblical Integration

In this world of limited resources we as
Christians need to make wise and godly
choices. Every decision we make
should be pleasing unto God. We
should constantly be thinking of our
testimony before God and mankind.
(Col. 1:9-12; Phil 1:27)
Economics

It is the common sense “science that
studies the choices that individuals,
businesses, government, and entire
societies make as they cope with
scarcity and the incentives that
influence and reconcile our choices.”
(Blade et al. 3)
• The continuing inability of
man to provide
everything he wants and
needs necessitates
choices.
Economic Scope and Purpose
Microeconomics Versus Macroeconomics:
“Economists study their subject on two
levels:”


Microeconomics
Macroeconomics
Microeconomics
examines the individual
components of the economy.
“What causes a person to save
money?”
 “How does one business firm set its
prices?”
 “How will the closing of a factory affect
the individual community?”

(Bade 3)
Macroeconomics
examines the economy as a whole
(aggregates).
 Concerned
with large-scale
economic choices and issues.
 Study of national and global
economies.
(Carper, 8)
Macroeconomics

“What causes bank interest rates
to rise and fall?”

“What causes large-scale national
unemployment?”

“Why do the Japanese sell more
goods to the United States
than the United States sells to
Japan?”
(Carper, 8)
There are two big economic questions:
• “How choices determine what,
how, and for whom goods and
services get produced?
•
When do choices made in selfinterest also promote social
interest?”
(Blade et al. 3)
Three Basic Questions
What?
What goods and services get
produced and in what
quantities?
(Blade et al. 4)
Three Basic Questions
How?
How are goods and
services produced?
(Blade et al. 4)
Three Basic Questions
For Whom?
For Whom are the various
goods and services
produced?
(Blade et al. 4)
.
A good - any tangible (physical)
thing that has a measurable life
span.
newspaper
VCR/CD Players
food
(Carper, 4)
A service is any intangible item =
labor.
customer service
accountant
librarian
(Carper, 4)
“Goods and services that bear a positive economic
cost are known as economic goods and economic
services.“
(Carper, 4)
“Goods and services that you
are paid to take are said to be
negative economic cost and
are called nuisance goods and
services.”

Such as, toxic waste, garbage, and
sewage.
Economists argue that noise pollution and visual
distractions, such as, unsightly billboards
constitute nuisance services.
“Some firms make significant profits by
taking nuisance goods and turn them into
economic goods – a process called
recycling.”
(Carper, 5)
When do choices made in self-interest
also promote social interest?
The
choices that are best for the individual who
makes them are choices made in the pursuit of
self-interest.
The
choices that are best for society as a
whole are choices made in the social interest.
Why Do We Make Choices?

We make choices numerous
times each day:
“Should
I get out of bed or sleep just a
few more minutes? “
“Do I want oatmeal or pizza for
breakfast?”
 Shall I drink milk, orange juice, or Dr.
Pepper?
(Carper, 2)
Why are choices necessary?

The quality of a person’s life is directly related to
the quality of each choice he/she has made in
their life.

To understand choice is to understand life and to
understand economics is to understand choice.
As Christians we are to be careful and wise
in our choices.

“There is a way that seems right to a man, but its
end is the way of death.”
Prov. 14:12

“All the ways of a man are pure in his own eyes,
but the Lord weighs the spirits.”
Prov. 16:2
(“The New King James”)
 While man can be self-deceived in
his choices – God determines the
true motives (Prov. 21:2; 24:12;
I Sam 16:7; I Cor. 4:4).
 Even
when we make the wrong
choices God will use those
choices for His purposes
(Gen. 50:0; I King 12:15; Ps. 119:133;
Jer. 10:23; Dan. 5:23-30; I Cor. 3:19, 20)
Core Economic Ideas





Rational Choice
Opportunity Cost
Benefit
Margin
Incentives
(Bade 13)
Rational Choice
A rational choice is a choice that
uses the available resources to
best achieve the objective of the
person making the choice.
We make rational choices by
comparing costs and benefits.
(Bade 13)
Cost: What You Must Give Up
Opportunity Cost Is the basis of choice
• The best thing that you must give up to
get something—the highest-valued
alternative is forgone.
• “Opportunity benefit of a choice is the
satisfaction a person receives from the
choice.”
• “Opportunity cost is the satisfaction one
gives up by not choosing what was
second best.”
(Bade 14)
On the Margin
• A choice made on the margin is a choice
made by comparing all the relevant
alternatives.
Making a Rational Choice
• When we take those actions for which
marginal benefit exceeds or equals
marginal cost.
(Bade 15)
Marginal Cost
vs.
Marginal Benefit
Marginal cost is the cost of a one-unit increase in
an activity.
Marginal benefit is what you gain when you get
one more unit of something.
(Bade 15)
Incentives
“A reward or a penalty...that encourages
or discourages an action.”
 There are marginal costs and marginal
benefits to incentives.

Professional Sports
 Actor/Actress

(Bade 13)
To Choose or Not to Choose?
That Is the Question
Activity 1
NCEE
CAPSTONE: EXEMPLARY LESSONS FOR HIGH SCHOOL
ECONOMICS
NEW YORK, NY.
Objectives
 Identify alternatives in various choice situations
 Identify costs and benefits associated with various
alternatives
 Make economizing choices, given competing
alternatives.
Introduction
 Productive resources are limited. Therefore,
people can not have all the goods and services they
want; as a result, they must choose some things
and give up others.
 Effective decisions making requires comparing the
additional costs of alternatives with the additional
benefits. Most choices involve doing a little more
or a little less of something few choices are all-ornothing decisions.
Activity 1
 The purpose of this lesson is to help you develop the
ability to solve economic problems.
 To do this, you need to learn some basic assumptions
of economics.
 One assumption has to do with whether or not
people have choices.
Activity 1
 People often think they have no choice.
 Example:
 Todd recently purchased his own car on credit.
He works at a part-time job at an auto-wrecking
firm to earn the money he needs to make
payments on his new car. Lately, his work in
school has declined. When his teacher asked
him if he was studying for the tests, he replied,
“Not really, I’d like to study more, but I have no
choice. I’ve got to keep working to pay off my
car loan.”
Activity 1
 Did Todd have alternatives in his situation?
 Have you ever felt like Todd, that there really wasn’t
a choice?
 Read the case in your Activity handout.
Activity 1
 What was Ashley’s problem?
 What alternatives did Ashley have?
 What were the costs of each alternative?
 What were the benefits?
Activity 1 Lesson
 Break-up into groups of no more than four students.
 Read the two cases and answer the questions
together.
 You will need one individual from your group to be
your spokesperson.
Example 1
Alternatives:
Possible Cost:
Possible Benefit:
Keep the price the same.
Reduce profits, maybe
lose money and go
out of business.
Keep prices the same and
customers happy.
Keep the price the same
by discontinuing some
of the sandwiches’
special features.
Customers might not
buy as many
sandwiches –
reduced sales.
Keep prices and profits
about the same.
Discontinue selling
sandwiches and
introduce less expensive
lunches.
Customers might not
like the new
product, maybe lose
sales.
Keep profits about
the same.
Raise prices of
sandwiches
Customers might buy
less, maybe lose
money.
Keep profits about
the same.
Example 2
Alternatives:
Possible Cost:
Possible Benefit:
Produce a different
product.
Difficult to transform the
plant and equipment.
Keep profits about the
same.
Produce airbags and
GPS or a foreign
producer.
Difficult to get a
contract.
Increase sales
Close the plant and go
bankrupt
Lose money.
Employees out of
work.
No more worries
about competing
with foreign
producers.
Restrict imports
Few obvious costs to
this owner and
workers but
increased costs for
others
Increased sales and
jobs for his
workers.
Works Cited
Blade, Robin, and Michael Parkin. Foundations of Economics:
Instructor’s Manual. 2nd ed. Boston: Pearson Education,
Inc., 2004.
Carper, Alan. Economics for Christian Schools. Greenville: Bob
Jones University Press, 1998.
"The New King James Version." Logos Bible Software.
CD_ROM. ed. 2004.

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