Download Bell Ringer Scarcity and the Science of Economics Students will be

Bell Ringer
You inherit 20 tons of steel and need to
sell it by making it to anything possible
to sell for the most money possible.
Answer the 3 questions:
WHAT will you make ?
HOW will you make it?
WHO do you intend to buy it?
Scarcity and the Science
of Economics
Chapter 1, Section 1
Students will be able to:
Recognize the fundamental economic
problem.
Examine the three basic economic
questions every society must face.
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Key Terms:
Scarcity:
Scarcity: the condition that results from not
having enough resources to produce all
the things that people would like to have.
or
“the condition that exists when wants
exceed resources available to satisfy
wants.”
wants.”
Which definition sounds better to you?
Wants vs. Needs
WANTS
A way of expressing a
need.
-unlimited?
NEEDS
A basic requirement for
survival
-food, clothing, shelter
-fixed?
Hands Up Q: Is being hungry for pizza a want or need?
Discussion Q: Which uses more resources wants or
needs? Are wants unlimited?
TINSTAAFL
“Buy one, get one free”
free”
“Free samples”
samples”
“Free and reduced school lunch”
lunch”
- “Free”
Free” often means “Without explicit cost to
the consumer”
consumer”
Someone has to pay the farmer, the
processor, the trucker, the preparer
Mysteriously omitted from discussion;
Who has to dispose of it?
What are those costs?
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Three Basic Questions
Scarcity forces producers to answer
these 3 questions:
WHAT to produce?
HOW to produce?
FOR WHOM to produce?
WHAT to produce
The things produced tell us what society
values.
Use the steel in New Quahog for guns or
irrigation pipes?
HOW to produce
What labor resources should be used to
produce something?
- Major goal: reduce cost of making
something (overhead) which makes a
manufactured item less expensive and
therefore available to more people.
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FLIGHT OF THE
CONCHORDS
They're turning kids into slaves
They're turning kids into slaves just to make
cheaper sneakers
But what's the real cost,
cause the sneakers don't seem that much
cheaper
Why are we still paying so much for
sneakers when you got little kid slaves
making them
What are your overheads?
FOR WHOM to produce
WHO’
WHO’s wants or needs should we
attempt to satisfy?
a. The people who can pay for wants
b. The people who can have someone
else pay for their needs
c. Everyone
d. No one, I am keeping the steel for
myself.
Four FACTORS of
PRODUCTION
The resources required to produce the
things we would like to have:
CAPITAL
LAND
LABOR
ENTREPENEURSHIP
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LAND
“gifts of nature”
nature”
Natural resources, anything not created by
humans.
Hands Up: Land or not?
- Forests
- livestock
- climate
Is there enough land to feed everyone on
the planet? y/n
CAPITAL
The tools, equipment, machinery and
factories used in the production of
goods and services*
These are capital goods, which is not to
be confused with financial capital*
which is money used to buy capital
goods.
* a.k.a. the means of production
LABOR
This category includes all people except
entrepreneurs.
The cost of labor varies from place to
place, so jobs go to ASIA.
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Entrepreneurs
People who risk their money to make
more money.
Homer the Entrepreneur
Identify the Four Factors
in School
What are the four factors of production?
LET’
LET’S LEAVE ECONOMICS CLASS
Land
Labor
Entrepreneurs
Capital
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