1. True or False? Abundant resources cannot be scarce.
Small amount of an item make it scarce.
It is useful and easy to distinguish between wants and needs.
Economic reasoning is difficult.
Economics is about money.
People often find themselves in economic situations where they have no choices.

2. Scarcity , Choice, and Economic Reasoning
Introduction into Economics and Economic Thinking

3. Objectives
Understand how scarcity forces people to choose how they will use resources to satisfy human wants.
Understand how economic reasoning can help students explain puzzling human behavior.
Understand the concepts and rational underlying the Guide for Economic reasoning.

4. Economic Reasoning
All social phenomena emerge from the choices that individuals make in response to expected costs and benefits to themselves.
Buy a car?
Buy New ?
Used car?
Leased New?
Buy Off Lease?
Dealer or E bay?
What are the costs and benefits to you?

5. Scarcity
A condition that exists when a resource has at least 2 valuable uses.
Limited quantities of resources to meet unlimited wants.
Everything is scarce.
Everyone must make decision on which scarce goods to obtain.

6. Factors of Production
The 3 groups of resources that are used to make goods.

7. Land Natural resources that are used to make goods and services.
Forrest
Coal

8. Labor The effort that people devote to a task for which they are paid.
Teacher
Lawyer
Grocery clerk
Garbage man
Mowing lawns
Mob “Hitman”
Pharmacists

9. Capital
Any human made resource that is used to create other goods and services.

10. Defining Scarcity People must want it in order for it to be scarce.
Small Pox
Hamburger to a Vegetarian
Fur Coat to a PETA Member

11. Wants Versus Needs Transportation Shelter Recreation Clothing Food
Education
Telephone or Cell Phone

12. Wants Versus Needs
The concept of “need” is not helpful when trying to explain or anticipate human behavior
Needs – no choice regarding behavior
Fulfill your needs and then go after your wants
Wants – choice with regards to behavior
Not necessary for survival
You will not die without your cell phone no matter what you believe.