Lesson 1.1 Economic Choice Essential Questions: How does the availability of resources impact the decisions of individuals, businesses, and governments? How can opportunity cost be used to express the true cost of economic decisions?
Economic Choice Economics is the “social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resources” (Economics: Principles & Practices)
Economic Choice Economics is the “social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resources” (Economics: Principles & Practices) Scarcity of resources is the fundamental economic problem facing all societies. Our wants are unlimited, but the resources necessary to satisfy those wants are scarce.
Economic Choice Economics is the “social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resources” (Economics: Principles & Practices) Scarcity of resources is the fundamental economic problem facing all societies. Our wants are unlimited, but the resources necessary to satisfy those wants are scarce. Economists use opportunity cost to express the true cost of a choice. By making the choice that you made you missed out on the “opportunity” to do something else with your money, time, or other resources.
Interpret this 2007 cartoon of George W. Bush. How does it relate it to the concepts of scarcity and opportunity cost?
Productive Resources Consumers face scarcity and opportunity cost when they spend money, but producers also face scarcity and opportunity cost when they use their productive resources to produce goods and services for profit.
Productive Resources Consumers face scarcity and opportunity cost when they spend money, but producers also face scarcity and opportunity cost when they use their productive resources to produce goods and services for profit. Natural Resources (AKA “Land”) are those created by nature, for example coal, iron ore, corn, and water. Some natural resources are renewable; others are not.
Productive Resources Consumers face scarcity and opportunity cost when they spend money, but producers also face scarcity and opportunity cost when they use their productive resources to produce goods and services for profit. Natural Resources (AKA “Land”) are those created by nature, for example coal, iron ore, corn, and water. Some natural resources are renewable; others are not. Human Resources (AKA “Labor” and “Entrepreneurship”) include all of the abilities and effort, both physical and mental, of human beings.
Productive Resources Consumers face scarcity and opportunity cost when they spend money, but producers also face scarcity and opportunity cost when they use their productive resources to produce goods and services for profit. Natural Resources (AKA “Land”) are those created by nature, for example coal, iron ore, corn, and water. Some natural resources are renewable; others are not. Human Resources (AKA “Labor” and “Entrepreneurship”) include all of the abilities and effort, both physical and mental, of human beings. Capital Resources are man-made resources used in production, for example tools, machines, and equipment. *The four factors of production are land, labor, entrepreneurship, and capital (pp 7-8)
What resources are used when a farmer grows a crop of corn What resources are used when a farmer grows a crop of corn? What else could the farmer have used these resources for? What resources are used when a carpenter builds custom bookshelves? What else could the carpenter have used these resources for? What resources are used when a baker bakes a wedding cake? What else could the baker have used these resources for?
Production Possibilities Frontier Product X Product Y
Production Possibilities Frontier Cupcakes (in hundreds) Cookies (in hundreds)
Production Possibilities Frontier Cupcakes (in hundreds) Cookies (in hundreds)
Opportunity Cost is 300 Cupcakes
Opportunity Cost is 300 Cookies
“Guns or Butter” represents a choice that the federal government must make every year when allocating our nation’s resources.
Economic Choice Summarizer: What viewpoint/opinion is the cartoonist expressing? Explain some of the symbolism of the imagery contained in the cartoon. Use (and underline) the following words in your explanation: scarcity, opportunity cost, guns or butter