Economics Chpt 1-1 Scarcity and the Science of Economics

Economics 1-1: ESSENTIAL QUESTION: 1.) Why is scarcity the most fundamental economic problem? 2.) Why are the four factors of production essential to producing all of the goods and services that humans need? GPS STANDARD: SSEF1- a.) define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources b.) define and give examples of productive resources (e.g.,- land (natural), labor (humans), capital (goods), entrepreneurship).

Scarcity and the Science of Economics Scarcity forces us to make choices. We can’t have everything we want, so we are forced to choose what we want most. Scarcity is the condition where unlimited human wants face limited resources. Economics is the study of how people satisfy wants with scarce resources.

Scarcity and the Science of Economics Needs are required for survival; wants are desired for satisfaction.

Scarcity and the Science of Economics “You can’t always get what you want!”- Mick Jagger

Scarcity and the Science of Economics We witness scarcity with each year’s “hot” new toy: Inspired by hunter President Teddy Roosevelt, Americans coveted the teddy bear in Cabbage Patch dolls were big during the 1980s

Scarcity and the Science of Economics We witness scarcity with each year’s “hot” new toy: Tickle Me Elmo in By 1999 Game Boy’s Pokémon was the rage with a 10-cent trading card. The most-prized first-edition pocket monsters were in such short supply that they commanded from $8 to $182.

Three Basic Questions What must we produce? Society must choose based on its need. How should we produce it? Society must choose based on its resources. For whom should we produce? Society must choose based on its population and other available markets.

The Factors of Production Factors of production are resources necessary to produce what people want or need: Land is the society’s limited natural resources—landforms, minerals, vegetation, animal life, and climate. Labor is the workers who apply their efforts, abilities, and skills to production.

The Factors of Production Factors of production are resources necessary to produce what people want or need: Capital is the means by which something is produced such as money, tools, equipment, machinery, and factories. Entrepreneurs are risk-takers who combine the land, labor, and capital into new products.

The Factors of Production Production is creating goods and services—the result of land, capital, labor, and entrepreneurs.