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Welcome to lesson two, where we will conduct an in-depth examination of economics through the eyes of a social scientist. In simple terms, we are going to consider all aspects of an economic problem or question so that we can make the most informed analysis and decision possible. Why is this so important in the field of economics?

If we consider only one side of a question, our decision will not reflect a balanced viewpoint. We must conduct a thorough examination of the problem in order to make the best possible decision.

Remember to look at the graphics.

Let us reconsider the 'Take the Wheel' segment from the first lesson.

The question before your Senate Finance Committee was the following: Should America increase computer spending for education to upgrade technology in our schools, or upgrade weapons technology by purchasing new fighter jets for the U.S. Navy?

Think about some questions that you, as a United States Senator, might ask before you make such a decision.

The following individuals are scheduled to testify before your Finance Committee:

-The National President of the Parent Teachers Association (PTA);

-A group of grade school students;

-The leader of the U.S. Navy;

-A high school principal;

-The president of the company that will be building the new jets;

-The president of the computer company that sells to schools;

-The leader of a teacher union;

-The leader of the union workers who build jet planes;

-The president of the company that sells computers to the company that will make the jet planes for the Navy.

Will all of these people have the same point of view or opinion? Will they be in agreement as to how our country should upgrade technology?

Obviously, all of these individuals would represent very different viewpoints in regard to the updating of technology. As a Senator, you will have to weigh all of this information so you can make an informed

Imagine that the jet planes would be built in your home state. Over 5,000 jobs will be lost if the money goes to update technology in the schools rather to build the jet planes. At the same time, many individuals and groups representing the schools in your state are calling, asking for your support.

Remember the choices and decisions you have to make. How shall we use our resources?

In lesson two we will identify the social sciences that will become ECONOMIC APPLICATION TOOLS. These tools will help you see a problem from all sides. This is what a social scientist does for a living. What is a social scientist?

A social scientist is someone who studies society and the interpersonal relationships of people within that society.

The social sciences will serve as additional ECONOMIC APPLICATION TOOLS helping us examine a problem from all sides.

This is what a social scientist does for a living. What is a social scientist?

A social scientist is someone who studies society and the interpersonal relationships of people within that society.

In an economic sense, a social scientist would look at the following areas:

(1) How do we use our resources?

(2) How well do we use our resources?

The first answer may be determined by the way a nation considers what, how and for whom to produce? Remember those questions from lesson one? The second question is answered when we examine the effects of the use of our resources.

Real Life Economics 101

You want an after school snack and you decide to bake a cake using many different ingredients. You put all of the ingredients (resources) together and bake the cake. We can now answer question one. How did we use our resources?

Consider the answer to question two. How well did we use our resources? The answer to this question would depend on the taste of the cake. You probably did not use your resources very well, if you confused baking powder with baking soda.

Please note the following ECONOMIC APPLICATION TOOL, scarcity.

SCARCITY calls the tune in economics.

We cannot satisfy all of our wants and needs. Most of us would like to have more time for recreation, more wealth, a larger bank account and more consumable goods. However, all of these wants and needs conflict with one another because we don't have enough resources.

Point to Ponder!

You get ready to bake the cake and discover a resource scarcity; you do not have any milk or eggs. Because of this scarcity, you decide to have a bowl of cereal rather than bake the cake. You remember the milk situation and now you to make another CHOICE or DECISION.

The concept of scarcity in economics introduces two new ECONOMIC APPLICATION TOOLS, supply and demand.

Demand refers to the quantity of goods or services that buyers are willing to purchase at various prices at a given time.

Supply refers to the quantity of goods and services that sellers are willing to offer at various prices at a given time.

The amount a CONSUMER is willing to pay or demand, depends on many factors. The amount a PRODUCER is willing to produce or supply is also dependent on these same factors.

There are probably not very many surfboards sold in Montana, farm tractors in New York City, or snowmobiles in Hawaii. How many snow tires would be supplied to consumers in Florida compared to Minnesota?

The concept of supply and demand will be repeated throughout these economic lessons.

You deal with the law of supply and demand everyday based on your wants and needs.

How much are you willing to pay for a concert ticket to go see your favorite rock group?

What are the factors that will determine the price of the ticket?

If we picture what economics is, we think of people trying to make a living.

They work to produce goods or services that other people want and are willing to buy.

In return for the value they create, people get paid in order to buy the things they want.

In the simplest society, people work to produce either all or most of the things they and their family want and will consume directly.

In a more complex society, people are more specialized and must exchange the goods or services they produce for goods and services that other people produce.

This allows people to satisfy many more wants than they could satisfy if they themselves had to create everything they needed and wanted.

When we look at people as part of a family, society, or a part of a great nation, we know they have material wants and needs they seek to satisfy.

Please go back and reread screens

16-17-18-19-20-21-22-23 and 24.

These concepts are very important to your understanding of economics.

Why should we study economics? Will this study of economics help me in any way? In a democracy, we as citizens are expected to participate, at least indirectly in decision making. In voting for representatives in a political party, we are endorsing certain principles and supporting particular solutions to problems facing society.

What are some examples of these problems that society must resolve?

Should sales be increased at the expense of the environment? Will raising gasoline taxes reduce consumption? Should we adopt a balanced budget amendment to the U.S. Constitution? Should we upgrade technology in the schools or upgrade weapons technology by purchasing jet planes for the Navy?

These few questions although asked in a political framework, have an economic nature. They are as important as the money in your pocket.

There is little government activity that does not have an economic origin. It is difficult to avoid the influence of government in everyday life. The influence of government policy on all aspects of your life (social sciences) may seem remote at present.

You are however, deeply involved in making numerous economic decisions everyday of your life. In our economic system, you have the freedom to make these decisions and choices.

The study of economics will provide your with a better understanding of your role as a consumer and producer as a citizen of the United States.

When we look at economics through the eyes of the social scientist, we see how these economic decisions have changed our society.

Economics is a social science. The fields of political science, sociology, anthropology, geography and economics often overlap. Because of the abundance of economic data and the ample opportunity for scientific research in the real world, economics has sometimes been called the "king" of the social sciences.

Reflecting the scientific nature of economics, the Swedish Academy of Science in 1969, instituted the Nobel Prize in Economic Science.

A knowledge of economics is essential for wise policy making. Government policy-makers who do not understand the consequences of their actions will not likely reach their goals.

Recognizing the link between economic analysis and policy, Congress in 1946 established the Council of Economic Advisers. The purpose of the Council is to provide the President with an analysis of how the activities of the federal government influence the economy. The chairmanship of the council of economic advisers is a cabinet level position.

The social sciences which deal with human behavior and cultural aspects includes the disciplines of anthropology, political science, geography, and sociology.

A reminder that the focus of this lesson is to learn how to utilize these social sciences for the viewpoint of an economist as you examine information about people and events in the modern world and history.

You will be asked from time to time throughout all of the economics lessons, to assess a situation from the perspective of anthropology, political science, geography, economics and sociology.

What is Anthropology?

An anthropologist is concerned with the study of traditional human cultures, determining how people lived and organized themselves in primitive societies.

A culture is defined as the customs, beliefs, social forms, and material traits of a racial religious or social group. What are some of the customs and beliefs of the United States of America? What do we celebrate or believe as a nation?

We certainly celebrate the Fourth of July, historical events and the birthdays of famous people. What are the beliefs and customs your state or local community celebrate each year? Think about the different holiday customs of families that reflect a variety of religious beliefs.

Anthropology is also concerned with making generalizations about patterns of human behavior in societies throughout history. These studies could be used to explain the way people act today.

In other words, how has culture been passed on from generation to generation while adapting to environmental, technological or social change?

Point To Ponder!

How do you think the invention of the automobile, television, automatic washer and dryer or computer have changed the way people live?

Sociology is actually the study of our present society. Many of the areas that we study in anthropology from the past are carried over into what is happening in our modern world.

Sociology focuses on the study of civilization today. How do people adapt their lives to the tremendous technological changes that have taken place in this century?

The information revolution and the advent of personal computers, changes in population, and the utilization of scarce resources are all subjects that a sociologist would study.

These types of social changes include the process our country has implemented to provide assistance to those individuals who cannot contribute to the economy.

A political scientist would be interested in how people have organized the rules, regulations and laws of their societies throughout history.

All countries, both large or small, rich or poor, face the same economic problems and questions.

The people of a country have established a form of government that must face the task of satisfying the unlimited wants of the people with the limited resources that are available.

A reminder that SCARCITY calls the tune in economics.

The development of a system of government makes it possible for people to have an economic system. The rights of citizens and amount of economic freedom they enjoy is directly related to the type of political system in their respective countries.

You will learn more about modern political and economic systems in lesson three.

How could an economist use geography? Throughout history, the environment and the available resources have dictated how people would live and survive. Historians work closely with geographers to determine the economic activities of ancient peoples.

Geographers study the physical and human characteristics of a location. Is the land fertile? Is water available? Are most of the people farmers?

Another consideration for geographers is the study of how people interact with their environment. If water is scarce, how do people conserve and use it to produce food necessary for survival?

Geographers also examine the movements of people. For example, how did the hunter and gatherers and other nomadic people have to move from one place to another in search of food.

Geographers study regions-areas with similar characteristics. Similar physical characteristics are what makes New England a region, while similar political and cultural traditions make the Mid-East a region.

POINT TO PONDER!

How would social scientists from the disciplines of anthropology, geography, political, sociology, and economics view the consequences of the cutting down of old-growth forests by private logging companies?

There are many sides for a social scientist to consider in regard to the cutting of the old-growth forest.

Anthropology - The old-growth forest is a link to our past.

Sociology - How it will impact the people living near the forest?

Political Science - How will government officials allocate resources?

Geography - What will be the effect on the land if the forest is cut down?

Economics - How will this affect the economy and the use of resources?

We will have a further discussion of the old-growth forests in lesson four.

Summary

In this lesson you have learned how social sciences can provide a viewpoint through which we can examine information about events in history and the modern world.

The social sciences of anthropology, political science, geography, and sociology are more ECONOMIC APPLICATION TOOLS you can utilize in the study of specific economic situations. This will make you a much more versatile economist.

You might even be nominated for the Nobel Prize for Economics.

Remember to look at the graphics.