1. Can You Have Everything You Want?
Unit One: Basic Economic Terms
Scarcity, Opportunity Costs and Trade-Offs

2. But Wants are Different from Needs
Everyone in society has needs that must be meet for survival—food, water, and shelter
We also have wants—things we desire that are not essential

3. We have
unlimited
wants

4. And live in a world with
Limited
resources

5. Scarcity vs Shortage Scarcity—limited resources, unlimited wants
Shortage—demand exceeds supply

6. Basic Economic Concepts #8
Scarcity is the condition in which our wants are greater than the resources available to satisfy those wants
EOC study guide
Basic Economic Concepts #8

7. 7

8. Scarcity is an economic fact of life
Economics is the science that studies the choices people make as they try to satisfy their wants in a world of scarcity
In economics we will study the choices of individuals, firms, and governments
Basic Economic Concepts #1
EOC study guide

9. Settling for Less Than Everything
If we can’t have everything we want, then what do we do?
We make CHOICES! OR OR
Opportunity Costs
Trade-Off

10. Trade-Offs vs Opportunity Costs
A Trade-off is the list of many choices one has in making a decision
Opportunity cost the next-highest-valued opportunity or alternative forfeited when a choice is made
Basic Economic Concepts #10
EOC study guide

11. Let’s say these are the choices you listed for yourself for Friday night:
Go on a date
Go out with my friends
Stay home and watch TV
Read your economics textbook
Go camping with our parents
A Trade-offs is the list of many choices one has in making a decision
Opportunity cost is the cost of passing up the next best choice when making a decision.
All other things listed.
Go out with your friends

12. Which flight should you choose? Why?
Given the following assumptions, make a rational choice in your own self-interest …
You want to visit your friend for a week.
You work every weekday earning $100 per day
3. You have three flights to choose from:
Thursday Night Flight = $275
Friday Early Morning Flight = $300
Friday Night Flight = $325
4. Your friend has to work on Friday.
Which flight should you choose? Why?

13. LeBron James Graduated from High School in 2003
Attend College
Joint the Cleveland Cavaliers
Free college education
$13,000,000 annual salary plus Nike and Coca-Cola as corporate sponsors

14. Karen’s Tough Choice Karen has a decision to make!
Karen is really tired because she stayed up watching Pretty Little Liars on Netflix
Karen has a test tomorrow morning in economics
She wants to sleep, but there is only 3 hours before for her economics test
Karen has a decision to make!

15. Karen’s Decision Making Grid
Choices
Sleep
Study
Benefits
Enjoy more sleep
Have more energy during the day
Better grade on test
Teacher and parental approval
Personal satisfaction
Decision
Study for the test
Opportunity cost

16. All Or Nothing?
Is Karen’s choice really an all or nothing proposition?
From an economist’s point of view, Karen could decide to think at the margin
Marginal thinking is deciding whether to do or use one additional unit of some resource
What should Karen do now?
EOC study guide
Supply and Demand #10

17. Decision Making at the Margin
Options
Benefit
Opportunity Cost
1st hour of extra study time
Grade of C on test
One hour of sleep
2nd hour of extra study time
Grade of B on test
2 hours of sleep
3rd hour of extra study time
Grade of B+ on test
3 hours of sleep

18. choices Therefore, People must make Wants are unlimited
Resources are limited
Therefore,
People must make
choices
Businesses must decide which products to make with these limited resources

19. Scarcity Restricts the Amount of Goods and Services a Society Can Produce
Society must decide how to use its scarce resources to make the goods its most values
Economists have created 4 distinct categories of the factors need to make all goods

20. How do we get the things we want?
We produce it using the
four factors of production
How do we get the things we want?

21. Small group activity—What does it take to make goods and services?
Objective—to see if students can come up with the four factors of production
Directions:
Combine 2 desks to make a pod
Sort through the photos and group like items into 5 different categories
Raise your hand when you are done so I can check them
Small group activity—What does it take to make goods and services?

22. Sort the factors of production: Land Labor Capital< Entrepreneur
Human capital
Physical capital

23. Basic Economic Concepts #2
The Four Factors of Production:
Land—all natural resources used to produce goods and services
EOC study guide
Basic Economic Concepts #2

24. Labor—the effort that a person devotes to a task for which that person is paid

25. Capital—any human-made resource that is used to produce other goods and services

26. “Capital” is divided into 2 subcategories
physical capital-all human-made goods that are used to produce other goods and services; tools and buildings
human capital--the skills and knowledge gained by a worker through education and experience

27. Entrepreneur—ambitious leaders who decide how to combine land, labor and capital resources to create new goods and services
30 Top Entrepreneurs Under 30