Economics

Scarcity NotesUnit 3, EconomicsWhat Economics is All About?

What Economics is All About?

Economics is the study of how people, choose to use scarce resources to satisfy their unlimited wants.

The foundation of economics is based on two facts: (1) Peoples wants are unlimited

(2) The resources needed to meet these wants ARE limited.

ScarcityCondition that results from unlimited wants and limited resourcesScarcity exists because every society has limited resourcesScarcity

Limited Resources

LandFactors of Production are called ResourcesThe resources of land, labor, capital, and entrepreneurship are used to produce goods and servicesLand (Natural) ResourcesThings found in nature

Capital ResourcesAny good that is used to produce other goods and services

Labor (Human) ResourcesPeople using their skills to do mental and physical work

Entrepreneurship A risk taker who opens their own business in seek of a profit

Identify the type of resource for the following examples:DoctorHammerGoldMoneyBulldozerDiamondsBill GatesFarmerGoods and Servicesbut since.Resources are LIMITED choices must be made and opportunity costs occur

Resources are used to produce Now, watch this videohttps://www.youtube.com/watch?v=0PgP0dXAGAE Opportunity CostThe value of what is given up when a choice is made.

OR

ExampleIf you have $10, and you go to the local restaurant, you decide that you want the taco meal. If you did not get that, you would get the hamburger meal. If that is not available, then youd rather keep your money. What is the opportunity cost (the next best alternative that is given up)?

A. $10B. The hamburger mealC. $10 and the hamburger mealD. The taco mealAnswerB. The hamburger meal

If you did not get the taco, you would have gotten the hamburger. Therefore, the hamburger was given up. You could not have the hamburger AND $10, so you did not give up both.

Opportunity Cost

Complete the chart belowChoices must be made and Opportunity Cost incurred to answerThree Basic Questions (write these at the bottom of the opportunity cost page)

1. WHATgoods and services will be produced?

2. HOWwill the goods and services will be produced?

3. TO WHOMwill the goods and services be distributed?

Essential questions to understandWhat are the four factors of production? What is opportunity cost, and how does it relate to scarcity?What is economics about?