DateDate: February 4, 2013: February 4, 2013

TopicTopic: Scarcity: Scarcity

AimAim: How does scarcity impact : How does scarcity impact various economic decisions?various economic decisions?

Do NowDo Now: HANDOUT: HANDOUT

YOU NEED FOOD!

FOR SOME SILLY REASON, YOU MAY WANT HIS CAR, OR HIS JEANS, OR THOSE SUNGLASSES.

Making ChoicesMaking ChoicesWhat is the difference between a need and a What is the difference between a need and a

want?want?Can you have everything that you need or Can you have everything that you need or

want?want?EconomicsEconomics study of how people satisfy their study of how people satisfy their

needs and wants by making choices.needs and wants by making choices.Why people make choices? ***SCARCITY!!Why people make choices? ***SCARCITY!!

What are some choices that you have What are some choices that you have made or are expecting to make in the made or are expecting to make in the coming year?coming year?

OR!!!

Scarcity and ShortageScarcity and ShortageScarcityScarcity nobody can have an endless nobody can have an endless

supply of everything supply of everything ALWAYS!ALWAYS!ShortageShortage producers cannot or will not offer producers cannot or will not offer

goods or services at the current prices goods or services at the current prices SHORT/LONG TERM.SHORT/LONG TERM.

Shortages can be long-term or short-term..Shortages can be long-term or short-term..

Think of Think of scarcityscarcity as being… as being…

BROAD BROAD (OR CONSTANT)(OR CONSTANT)

Think of a Think of a shortageshortage as being… as being…

LIMITEDLIMITED

THE 1970’S

THE FACTORS OF PRODUCTIONTHE FACTORS OF PRODUCTIONDefinitionDefinition: the resources that are used to make : the resources that are used to make

all goods and services:all goods and services:

a.) a.) LandLand – natural resources used to – natural resources used to produce goods. produce goods.

b.) b.) LaborLabor – effort that a person devotes to – effort that a person devotes to a ask for which they are paid. a ask for which they are paid.

c.) c.) CapitalCapital – any human made resource – any human made resource used to produce other goods or services. used to produce other goods or services.

A.) A.) Physical CapitalPhysical Capital human made objects human made objects used to create other goods and services. used to create other goods and services.

B.) B.) Human CapitalHuman Capital knowledge and skills a knowledge and skills a worker gains through education and worker gains through education and experience. experience.

PHYSICAL CAPITAL

HUMAN CAPITAL

ENTREPRENEURSENTREPRENEURS

ENTREPRENEURS ARE AMBITIOUS LEADERS WHO DECIDE HOW TO COMBINE LAND, LABOR, AND CAPITAL RESOURCES TO CEATE NEW GOODS AND SERVICES

AND I’M BEYONCE AND I’M LEAVING THIS SLOUCH FOR MR. MCHUGH!

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