Download Scarcity and the Science of Choice

Thursday, 4/23/15, Day 5
Essential Skill: DEMONSTRATE UNDERSTANDING of CONCEPTS
1-Defending your Agency assignment
2-Bureaucracy Walk Around
3- “Scarcity and the Science of Choice”
Scarcity and the Science of Economics
Economics
The study of how people try to satisfy unlimited and
competing wants through the careful use of scarce resources
1-What is the fundamental economic problem facing all
societies?
Scarcity
Textbook definition
Scarcity: the condition that results from society not having
enough resources to produce all the things people would like to
have.
2-What is a NEED?
A basic requirement for survival
Provide 3 examples.
1- Food
2- Clothing
3- Shelter
3-What is a WANT? Provide 3 examples of things YOU want.
Something we would like to have, but is not necessary for survival
Examples:
1- ?
2-?
3-?
4-What do the letters TINSTAAFL stand for and what does it
mean?
There Is No Such Thing As A Free Lunch
Most things in life are not free because someone has to pay for the
production in the first place
Because resources are limited, everything has a cost.
5-What are the three basic questions societies have to answer about the way
resources are used? Provide examples for all three.
1- What to produce: Where should society direct most of its scarce
resources? Military; Food; Housing. A society cannot have everything its people
wants: limited resources.
2- How to produce: Automated production methods or more workers?
3-For whom to produce: Who will receive the things produces? Housing for
the poor, the middle class, the wealthy?
Factors of production
Resources required to produce the things we would like to have.
6-List and define the four factors of production.
1- Land: natural resources-deserts, mineral deposits, fertile fields,
climate to grow crops.
2-Capital: Tools, equipment, machinery and factories used in the production of
goods and services. A bulldozer used in the construction of house; Computers
used to write books….
3- Labor: workers used in the production of goods and services
4- Entrepreneurs: a risk-taker in search of profits who uses the factors of
production [resources] to create new businesses or bring new products to the
market.
Name The Factor of Production
1-The tools you own
2-The area in your yard where you plant vegetables
3-The lawn mower you use to cut grass.
4-Gasoline purchased to run the lawn mower
5-The effort you exert in tending your garden
6-The water and fertilizer used in your garden
7-The organizational skills you possess and use in the operation of your business
to sell the vegetables you grow
Name The Factor of Production
1-The tools you own
Capital
2-The area in your yard where you plant vegetables
Land
3-The lawn mower you use to cut grass.
Capital
4-Gasoline purchased to run the lawn mower
Land
5-The effort you exert in tending your garden
Labor
6-The water and fertilizer used in your garden
Land
7-The organizational skills you possess and use in the operation of your business
to sell the vegetables you grow
Entrepreneurship
7-What are the four key elements of the study of economics? Explain why eac
one is important.
1-Description: we need to know what the world around us looks like:
economic activity.
Gross domestic product [GDP]: the dollar value of all final goods and services
within a country’s borders in a 1 year period. GDP is the most comprehensive
measure of a country’s total output and a key measure of the country’s
economic health.
7-What are the four key elements of the study of economics?
Explain why each one is important.
2-Analysis: Why things work and how things happen: prices, incomes, taxes.
3-Explanation: A common understanding of the way our economy works;
makes it easier to explain economic problems and how to fix the.
4-Prediction: To predict what might happen in the future and the effects of
different economic actions
Textbook definition
Scarcity: the condition that results from society not having
enough resources to produce all the things people would like to
have.
Write this down:
In order for a good or service to be considered scarce it must
meet both criteria:
Scarcity Formula
1-It must me limited or finite
2-It must be desired
In order for a good or service to be considered scarce it must
meet both criteria:
1-It must me limited or finite
2-It must be desired
Use this formula and determine which of the 11 items are
“Scarce” or “Not Scarce”