Welcome to Our Homeschool Economics Curriculum

Course Sample

Economics with Mike Sims

Mike Sims, who teaches Economics at Trinity Valley Community College, is the assistant city manager for the city of Terrell, Texas. He makes Economics come alive for students with creative themes ranging from Football Economics to Ski Slope Economics! His SchoolhouseTeachers.com course is located in the Teacher Lesson Archive. Here is one sweet example, perfect for the season.

Chocolate Economics

Week One: Concepts and Definitions

All definitions are taken from the Arnold Textbook or the Sowell Basic Economics Book.

What is economics?

Economics as a formal study grew out of the observation that countries would often go to arms to settle disputes about resource allocation—think feudal kings plundering each other or wars about imperialistic claims. Thus, some began to think that there must be better way to improve material conditions. Adam Smith, in The Wealth of Nations, published in 1776, suggested that perhaps commerce should be used instead of conquest.

Economics (short version) —The science of scarcity

Economics (classic) — Economics is the study of the use of scare resources which have alternative uses.

Economics (official) —The science of how individuals and societies deal with the fact that wants are greater than the limited resources available to satisfy those wants.

Economics (nickname) —The dismal science.

The Consumer Experience

Consumers seek a way to maximize utility, adding as many goods as their resources allow. In a market system, if a consumer desires more goods then they have resources to acquire, then they are forced to provide a benefit of some sort to someone else in the economy in order to obtain additional resources. This incentive encourages participation in the market and wealth generation, two hallmarks of people in capitalist market societies.

Good — A thing from which consumers receive satisfaction or utility.

Bad — A thing from which consumers receive dissatisfaction or disutility.

The Producer Experience

Producers seek a way to combine the four types of resources listed below in order to maximize the return on their investment. The entrepreneur plays the key role of combining the other resources to some efficient means of producing something consumers want. If a second entrepreneur can come up with a better way to produce a similar or a better good for less, then the first entrepreneur will either change or go out of business because he or she will not be serving the public as effectively. This competition forces innovation and efficiency, two hallmarks of firms in capitalist market societies.

Land — all natural resources, such as minerals, forests, water, agricultural land, and other unimproved land

Labor — the physical and mental talents people contribute to the production process

Capital Produced — goods that can be used as inputs for further production, such as factories, machinery, tools, computers, and buildings

Entrepreneurship — the talent that some have for organizing the other resources to produce goods, for identifying new business opportunities, and for developing new ways of doing things

Why trade?

We trade because everything is scarce and people are always seeking a reallocation of resources that is more favorable, with all goods and resources going to their highest and best use. Thus, we need a market-oriented way to decide how to ration scarce resources. Because people compete for scarce resources, every society has to come up with a means of allocating resources. If the market doesn’t reallocate resources, brute force or family connections or imperial fiat may serve to reallocate resources.

Scarcity — the condition in which our wants are greater than the limited resources available to satisfy them

Rationing Device — A means for deciding who gets what of available resources and goods

Opportunity Cost — the most highly valued opportunity or alternative forfeited when a choice is made

Exchange — the process of giving up one thing for another

How much trade?

Since goods and the resources needed to produce them are scarce, we should make trades until what we sacrifice (the opportunity cost) for a marginal unit is equal to the benefits that we get from any trade. People and businesses trade to become better off and stop trading only when the only trades they can afford would make them worse off.

Efficiency — any condition when marginal benefits equal marginal costs

Decisions at the Margin — decision making characterized by evaluating the current situation and weighing the benefits of an additional unit against the costs of an additional unit

Marginal Benefits — the benefits connected with consuming an additional unit of a good or undertaking one more unit of an activity

Marginal Costs — the costs connected to consuming an additional unit of a good or undertaking one more unit of an activity

Conclusion

The human desire for more can fairly be described as insatiable. This drives scarcity and the fact of scarcity drives the notion of opportunity cost. My resources are limited, so I can’t have one thing without giving up another. Since giving up something is painful, we have to measure the benefits versus the cost. This is done on the margin—i.e. the cost of one more unit compared against its benefit.

More About This Course

The Economics course by Mike Sims on SchoolhouseTeachers.com is presented in the form of reading assignments, videos, research projects, PowerPoint presentations, news stories, review questions, and self-tests.  The first half of this year-long course introduces and explains economics in a variety of ways—through chocolate economics, the role that piracy plays in economics, gamma ray economics (the powers endowed by economics), football economics, urban economics, Christmas budgets and the effect on the economy because of Christmas gift-giving, and ski slope economics (the concept of elasticity in relation to supply and demand).

The second half of the course focuses on “The History of Economics.” A foundation will be laid for understanding economics from a historical perspective. Twelve great names in economics history will be studied in historical order with the following goals:

1. Understand the economic and financial times in which they lived. An example: How bad was the Great Depression, what was its worldwide impact, and what did it teach the economists who lived through it?
2. To get to know the biography and personal lives of these great economists. You will find out that one of them was a homeschool tutor!
3. To find out about their major works and the contributions they made.
4. To learn the foundations of economics through a historical perspective. For instance, what did the Corn Laws do to grocery prices and the poor in a country that’s a bad place to grow corn in the first place?

Economic textbooks are typically full of jargon that doesn’t make intuitive sense. (You’re tempted to wonder: Are Pigou Taxes a penalty on people who let their hogs run free? Is the Laffer Curve a funny bend in the road?) Yet, if you’ll join us for The History of Economics, you’ll find that they make perfect sense when we meet the great minds and historical events behind the jargon—and give us greater understanding of our modern economy.

I hope you learn and enjoy!

— Mike Sims

Resource List:

The following books are referred to throughout the course. They are not required reading for a basic introduction to economics, but will be necessary for high schoolers wishing to earn credit. These are common textbooks that should be available at most libraries.

• Basic Economics: A Common Sense Guide to the Economy by Thomas Sowell
• Microeconomics by Roger Arnold (the current edition is not needed; older editions are generally available used very inexpensively and include the material needed)
• Urban Economics by Arthur O’Sullivan (only needed for Unit 7)
• New Ideas from Dead Economists by Todd G. Buchholz (only needed for Unit 11)