1. ECONOMICS CHAPTER 1, SECTION 2- SCARCITY AND CHOICE

2. I. Scarcity A. Definition-Scarcity is the condition that occurs when limited resources meet unlimited wants and needs.

3. II. Allocation A. Allocation is a response to scarcity. B. Definition-Allocation is the distribution of resources which is done to satisfy the greatest number of needs and wants.

4. II. Allocation C. 3 questions must be answered to allocate resources effectively: 1. What to produce? 2. How to produce? 3. For whom to produce?

5. What to produce? How to produce? For whom to produce? Choices Scarcity Unlimited wants And needs Limited Resources

6. III. Productivity A. Productivity is used to determine if resources are being used wisely. B. Definition-Productivity is the rate at which goods are produced, and the amount produced, compared with the work, time, and money needed to produce them.

7. III. Productivity C. Efficiency-Using the smallest amount of resources to produce the greatest amount of output. D. 3 ways to improve efficiency: 1. Division of Labor-Assigning a small number of tasks to each worker.

8. III. Productivity 2. Specialization-When workers gain expertise in their assigned tasks; occurs because of division of labor. 3. Mechanization-Replacing workers with machines that work faster and longer hours.