1. Topic I: Scarcity

2. I. Basic Concepts & Definitions
A. Economics– How society attempts to satisfy unlimited wants with scarce resources
1. Scarcity– Lack of resources to satisfy wants… resources are limited while wants are unlimited
(Rare is not Scarce)
VS.

3. Scarcity Leads to Three Economic Questions
Question 1: What Will Be Produced?
Societies must decide on mix of goods to produce
depends in part on their natural resources
Some countries allow producers and consumers to decide
In other countries, governments decide
Must also decide how much to produce; choice depends on societies’ wants

4. Scarcity Leads to Three Economic Questions
Question 2: How Will It Be Produced?
Decisions on production methods involve using resources efficiently
decisions influenced by a society’s natural resources
Societies adopt different approaches
with unskilled labor force, might use labor-intensive methods
with skilled labor force, might use capital-intensive methods

5. Scarcity Leads to Three Economic Questions
Question 3: For Whom Will It Be Produced?
How goods and services are distributed involves two questions
how should each person’s share be determined?
how will goods and services be delivered to people?

6. a. Trade-0ff– Alternative choices when allocating scarce resources (choices)

7. Or, the value of the next best thing you gave up.
b. Opportunity Cost– The cost/value of the next best alternative use of money, time or resources when a trade-off is made
Or, the value of the next best thing you gave up.

8. B. Four Factors of Production– All goods and services require them in some way
1. Land Natural Resources

9. 2. Labor Human effort

10. 3. Capital Tools, Factories, & Machines
* Financial Capital = $$$
Capital - Resources that people make and use to produce goods and services.

11. Where did I come from?

12. 4. Entrepreneurship (time)  the economic motivation for an individual to attempt to make a profit from an idea

13. What role do entrepreneurs play?
Brings the other factors of production together.

14. No Free Lunch…
EVERYTHING has a cost… time, money, emotions, etc… it costs because of scarcity
Prices ration our limited resources.
Without scarcity there would be no need for prices and therefore no economic problem

15. What is the difference between a want and a need?
Wants – desires for something
Needs – necessary for survival