Scarcity___Choice__and_Economic_Reasoning_for Chapt 1.ppt

Scarcity Economics

1. True or False?
1.Abundant resources cannot be scarce.
2.Small amount of an item make it scarce.
3.It is useful and easy to distinguish between
wants and needs.
4.Economic reasoning is difficult.
5.Economics is about money.
6.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
1.Transportation
2.Shelter
3.Recreation
4.Clothing
5.Food
6.Education
7.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.