2.1 Attempt to Produce Safer Air Travel
1. Post-9/11 Security Choices: The Cost of Safety
Context of TSA Creation
The Transportation Security Administration (TSA) is a federal agency established in response to the September 11, 2001, terrorist attacks.
Its primary goal is to prevent similar attacks by enhancing airline security.
Impact of Specific Incidents on Security Measures
Richard Reid (December 2001): An al-Qaeda member attempted to detonate a bomb concealed in his shoe on an American Airlines flight.
Result: Passengers are still required to remove their shoes for inspection by TSA agents.
Umar Farouk Abdulmutallab (Christmas Day, 2009): A jihadist attempted to detonate a bomb hidden in his underwear on a flight from Amsterdam to Detroit.
Result: Led to significantly more stringent TSA regulations, including the introduction of body-scan machines and "patdown inspections."
Trade-offs in Security Measures
Each new security procedure has required additional money (taxpayer funds) and time (for passengers).
These procedures have also resulted in a reduction of passenger privacy.
Fact: Despite passenger frustrations, these choices have successfully prevented subsequent terrorist attacks on flights to date.
Learning Objective: Understand how real-world events necessitate economic choices that involve trade-offs between different outcomes, such as safety, cost, time, and privacy.
2. Introduction to the Production Possibilities Model
Definition and Purpose
The production possibilities model is the first economic model introduced in this lesson.
It illustrates the various combinations of goods and services an economy is capable of producing.
The model considers the economy's available factors of production (resources) and technology.
Key Concepts Illustrated by the Model
Shows what it means to use resources fully and efficiently.
Suggests important implications for international trade by demonstrating potential production gains or losses.
Discusses the necessary conditions for economic growth, defined as an increase in the overall productive capacity of an economy.
Learning Objective: Define the production possibilities model and explain its significance in demonstrating an economy's capacity, efficiency, and growth potential.
3. Understanding Economic Systems
Definition of an Economic System
An economic system is the set of rules that governs an economy.
These rules define how an economy
Owns resources (e.g., land, labor, capital).
Makes decisions about the use of those resources.
Differences Among Economic Systems
Systems vary in how they answer fundamental economic questions (e.g., what to produce, how to produce, for whom to produce).
Differences often stem from varying degrees of government involvement in planning, production, and distribution.
Types of Economic Systems and Their Outcomes
Market Economy: Individuals (consumers and producers) largely decide what gets produced and how.
Government-Dominated Economy: Government makes most of the choices regarding production and distribution.
Fact: Market economies generally outperform government-dominated systems in providing more of the goods and services that people desire.
Historical Trend: The last half-century has seen a dramatic global shift from government-dominated toward market-dominated economic systems, largely due to their superior performance.
Learning Objective: Define an economic system, differentiate between market and government-dominated systems, and evaluate their historical performance in satisfying societal wants.