Concept of Scarcity-the basic economic problem

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This booklet helps in understanding the concepts of scarcity and thus helps in identifying examples of scarcity in their lives. It also emphasizes that because of scarcity we can’t have everything we want.
1. Lesson 1
Why don’t people give you everything you want?
Cognitive Objectives:
Students will
• Define scarcity as people’s inability to have everything they want.
• Identify examples of scarcity in their lives.
Affective Objective:
Students will
• Accept scarcity as a fact of life.
It is a paradox that people who learn to accept and deal with scarcity often achieve
much more than those who don’t accept it. The inability to deal with scarcity leads
to problems with money, education, skill development, and many other areas. If
children accept scarcity, they can then develop the skills necessary to minimize its
impact on their lives. They will realize, for example, that credit provides only a
postponement of the results of scarcity, not its elimination. Acceptance of scarcity
may also prompt people to discover alternatives that can minimize its effects.
Service-learning Objective:
Students will
• Identify examples of scarcity faced by individuals, their school, and their
community, where the class might be able to help.
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY 3
2. Choices & Changes
Lesson 1
Required Book
• The Berenstain Bears Get the Gimmes
Optional Books
• If You Give a Mouse a Cookie
• If You Give a Moose a Muffin
• If You Give a Pig a Pancake
Required Materials
• Candy, nuts, fruit, small “favors” or other items that students are sure to want.
There should be an insufficient number, so that not every child can receive an
• Student Journal, page 1-1
• Homegram 1
Economics Background for Teachers
Scarcity is the basic economic problem. It arises from the insufficiency of resources
to satisfy people’s wants.
Scarcity is ubiquitous. Rich people face scarcity when they want more than they
can buy, when they can’t be in two places at once, and when, accordingly, they
must choose among alternatives. Some people take exception to the statement that
rich people face scarcity, thinking that it implies sympathy for the rich. But scarcity
is not a matter of sympathy; it is merely a fact about the relationship between
unlimited wants and limited resources. As people’s resources grow, their wants also
grow. Poor people face scarcity, too, of course, but scarcity is not the same thing
as poverty. Poverty can be defined as income below a certain level, but scarcity
simply means that people’s resources are insufficient to satisfy their wants. Selfish
people face scarcity, but so do selfless people who want to help others.
Scarcity, therefore, is not a problem that can be solved, but it is a condition that
people can address in a rational manner in order to improve their lives. How? By
making choices. Since resources are scarce in relation to wants, people must decide
how they will use those resources. This is so even for the most advantaged among
us, since resources are finite. If they weren’t—if scarcity didn’t exist—people would
never have to choose. But people encounter scarcity all the time, and they find,
therefore, that they must respond by making choices.
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY
3. Choices & Changes
Lesson 1
• Scarcity: The condition of not being able to have all of the goods and services
one wants.
Getting Started
Explain that the class is beginning an important unit of study—one that can help
students be more successful in accomplishing their goals today and in the future.
Ask the students to repeat the name Choices and Changes. Tell them that they will
learn more about that name over the next few weeks. During that time they will
actually be studying a way to make choices. The name for this area of study is
economics. Write the word “economics” on the board. The students should repeat
the word and its definition as the study of decision making. Economics helps people
make choices about work, learning, money, and many other activities. Using
economics can help us become the kind of students and workers that we choose
to be.
Distribute the Student Journals and explain that these journals are for the students
to keep, not only during the unit but always. Completing work in the journals will
be important to their success in Choices and Changes, since the journal entries will
highlight new learning and suggest ways in which new learning may be applied,
now and in the future. Give the students a chance to look through their journals.
Teaching Procedures
1. Have the students read (or read to them) The Berenstain Bears Get the Gimmes.
In this story, the bear cubs see things they want everywhere—at the supermarket,
the mall, on TV, and so on. Mama and Papa Bear finally put a limit on the cubs’
unlimited wants.
2. Introduce the concept of scarcity. Tell the students that the concept means we
can’t have everything we want.
• Write the word “scarcity” on the board. Have students repeat the word.
• Discuss scarcity. Mama and Papa Bear couldn’t give the cubs everything they
wanted. Teachers can’t give students everything they want, such as pencils,
paper, and other school supplies, because these things are scarce. Parents can’t
give children everything they want, such as toys, trips to amusement parks, or
special clothes, because these things are scarce. Scarcity is the reason we can’t
have or do everything we want. The bear cubs weren’t willing to accept the fact
of scarcity, so they cried and acted like babies. Once Mama and Papa Bear
stepped in, the cubs began to act more properly. Accepting scarcity is the first
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY
4. Choices & Changes
Lesson 1
step toward learning what to do about it. That is what this class is
about–learning to deal with scarcity.
3. Bring something to class that the students will want (such as candy, nuts, or
other food or some small “favors”). Don’t bring enough for every student.
• Explain that you would like to distribute the items to the class, but you can’t do
it unless everyone can have an item, and you are not allowed to split items.
• Put the items away and explain that the problem is scarcity. With the supply of
items you have, there are not enough to satisfy everyone’s wants. Explain that
you know this is a disappointment, but scarcity often makes us disappointed.
(Note: It is important at this point to maintain the condition of scarcity. Do not
ask the students to suggest ways to solve the problem, since scarcity is not a
problem that can be solved.)
• Emphasize that because of scarcity we can’t have everything we want. The items
you brought to class were scarce in comparison to the students’ wants; there
weren’t enough items to satisfy the class.
4. Ask the students to identify real-life situations in which they have experienced
scarcity. Ask them how they react when their parents tell them that they can’t have
something they want. Do they act like the bear cubs or do they understand that
the problem is scarcity and accept it? How will they act in the future?
Service Learning
Tell the students that scarcity affects everyone. As a result, everyone could use
some help with jobs he or she can’t do alone. Tell the students that they will
identify a project that will involve them in helping somebody cope with a scarcity
situation. They should begin thinking about what that problem might be and what
sort of help they might provide.
Ask the students to open their journals to page 1-1. Have them brainstorm some
examples of scarcity faced by individual people they know, or examples from their
school or their community. Then ask them to list some of these examples in the
space provided. (Note: You may want to screen these examples to make sure that
no entries could be a source of embarrassment to anyone.)
Follow Through
To help the students recognize the pervasiveness of scarcity, point out examples of
scarcity as they arise in the classroom and in the school. For example, if you have
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY
5. Choices & Changes
Lesson 1
limited computers in the classroom and all the students would like to work on
them, explain that scarcity doesn’t allow everyone to work on the computers at the
same time. Scarcity is the problem. Similar situations might occur with sports
equipment, classroom supplies, and other areas.
Distribute Homegram 1 and ask the students to take it home and give it to their
Homework Helper. If “Parent’s Night” is early in the year, you may want to go
over this with the parents at that time.
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY
6. Choices & Changes
Lesson 1
Some Examples of Scarcity
People Can’t Have Everything They Want
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY
7. Choices & Changes
Lesson 1
Lesson 1
Dear Homework Helper,
Over the next few weeks, the children and I will be involved
in a unit of study called Choices and Changes. It is an econom-
ics unit and children will be learning about choices and the
changes that result from those choices. The children are likely
to be asking you about some of the choices that you have
made. It will be very helpful if you will spend some time with
your student helping him or her learn what choices are, the
changes that choices can make, and the importance of thinking
about decisions.
In the first unit of the program, the children will learn that
they can’t have everything they want, a situation economists
call scarcity. They will learn to deal with scarcity, trying to
find alternatives. Next, they will discover that every alternative
has advantages and disadvantages and that they should think
about the advantages and disadvantages of their alternatives
before making decisions. They will learn to use a five-step
decision-making process to help make decisions. Finally, they
will learn that every choice has an opportunity cost.
One aspect of the lessons is reading. Each lesson uses one or
two books to help students learn the ideas. If you would like
the titles of the books so that you can purchase them or get
them from the library and read them or have your student
read them at home, I will be happy to give you a list. Reading
with your student is a very effective way of helping him or
her learn to read.
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY
8. Choices & Changes
Lesson 1
There are two very important outcomes of this unit. First,
children learn that they have the power to make decisions.
The more you can allow them to make decisions at home,
the more effective this unit will be. We will be telling them
that their attitude is a decision, their willingness to cooperate
at school and at home is a decision, and their remembering
to bring their homework to school is a decision.
The second important outcome is that children take responsi-
bility for their decisions. At school, we will be holding them
accountable for their decisions. The lessons of Choices and
Changes will be applied in our classroom. Children will learn
that the teacher is not the “bad guy” but that they (the
children) control their lives and cause consequences by mak-
ing choices. The child is responsible for the choices and the
consequences. I encourage you to help your student recognize
decisions that he or she makes at home and to accept responsi-
bility for the consequences of those decisions.
Choices and Changes in Life, School, and Work,  National Council on Economic Education, New York, NY