AIM: Why is scarcity the basic economic problem?

Economics The study of how people seek to satisfy their needs and wants by making choices Solving the problem of scarcity Need – Something you need to survive Want – Something you want but is not essential for survival Can you think of some needs and wants?

Cookies Are there any cookies lovers in class? Who wants a piece of chocolate?

Chocolate Work in pairs and try to come up with a way to solve our problem – Try to come up with more than 1 solution. What was the “problem” in our example?

SCARCITY

Scarcity The basic problem in the world is scarcity. Economics is a course that deals with solving the problems of scarcity Water, trees (lumber), time, money, oil/gas, land, food, are all resources that are scarce

Scarcity

The Three Basic Economic Questions Each society must answer three basic questions because of scarcity What to produce? How to produce? For whom to produce?

Tradeoffs vs. Opportunity costs SCARCITY= Making Choices Making Choices= Costs The costs/sacrifices you’ll have to make are called tradeoffs. Your most valued tradeoff (the one you really don’t want to give up) is called the opportunity cost.

What are the tradeoffs/opportunity cost of buying an IPhone?

Make a list of five things you would want if money were no object.