Understanding the basics of scarcity in economics

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This booklet allows students to enhance their knowledge about concepts of scarcity in economics. It will introduce that helps understand its basics, and also various aspects related to it.
1. Introduction to Economics
How we deal with not having
enough of stuff
2. Food for thought!
• By graduating from high school, how much
more money will you make than someone
who doesn’t graduate over your lifetime?
• $283,500, or about $9,500 a year!
3. More food for thought!
• By graduating from college, how much
more money will you make than someone
who doesn’t graduate from high school
over your lifetime?
• $918,000 or about $30,000 a year!
4. What is Economics?
• Def. The study of how people satisfy their
needs and wants.
• We tend to use money to purchase our
needs and wants. Bartering (trading one
thing for another) and making yourself are
other methods.
5. What are NEEDS?
• Needs are the things that a person has to
have to survive.
– Food
– Water
– Shelter
6. What are WANTS?
• Wants are those things that you would
like, but do not need to survive.
• Ex. Car
Concert Tickets
7. Scarcity
Def. A limited amount of
resources to meet unlimited wants
and needs.
EVERYTHING is scarce!
8. Why do we have Scarcity?
We have Unlimited Wants and Needs
Limited Resources
Create Scarcity
So we need to make Choices
What to produce, How to Produce, For
Whom to produce (tomorrow’s lesson)
9. Causes of Scarcity
1. Personal Perspective: your own feelings
of what is needed or wanted.
– “I’m starving!”
– “I’m broke!”
10. Causes of Scarcity (cont.)
2. Poor Distribution of Resources: not using
your resources to their potential.
– “I never have any time- yet I watch 6 hours of
television a day!!”
– “I don’t have enough money for college, but I
have to have a pair of $200 sneakers!”
11. Causes of Scarcity (cont.)
3. Rapid Increase in Demand: A sudden
rush to use resources can cause a
– Tickle Me Elmo
– X-Box
– Beanie Babies
12. Ways we deal with Scarcity
1. Doing without something
– “Shut up kid- you’ll get nothing and like it”
– “I’ll go to the prom, but not on the senior trip”
– “Instead of driving to the theater, let’s watch a
movie on cable and save gas money”
13. Ways we deal with Scarcity (cont.)
2. Creating more resources
– “I’ll get a second job”
– “We’ll drill for more oil in Alaska”
14. Ways we deal with Scarcity (cont.)
3. Making better use of our resources
– “While I watch television, I’ll grade papers”
– “I’ll take my date to a matinee movie and use
a buy one get one free coupon for dinner!”
– “If we carpool to work, it’ll save gas money”
15. Real Costs
• Def. All of the resources used to produce a
good or service.
• Most resources can be used for only one
thing at a time.
16. Example of Real Costs
• Real costs of building a bridge instead of
a building
– Construction workers (cannot work on
building a new building)
– A crane (cannot be used to build a new
– Steel (used in the bridge, cannot be used in a
new building)
17. Trade Offs
Def. When you choose between two
possible uses for a resource, giving up
one alternative for another.
Ex. Bridge vs. Building
I can either buy this book or pizza,
not both.
18. Opportunity Costs
• When you make a trade off, there are
costs. The value of time, money, goods,
and services given up in an economic
choice. The #1 alternative is the
Opportunity cost.
• By doing this, I give up the opportunity to
do that.
– If we build the bridge, we can’t build the
– If I buy the pizza, I can’t buy the book.
19. Trade off: Sleep vs. Study
Options Benefit Opportunity
1 hour of extra Grade of C on 1 hour of sleep
study time test
2nd hour of Grade of B on 2 hours of
extra study test sleep
3rd hour of Grade of B+ on 3 hours of
extra study test sleep
20. What is the Opportunity Cost of
Going to College?
• Benefits • Opportunity Costs
– Higher Income – Costs a LOT of money
– More Job opportunities – Student loans for
– Job opportunities in a years
career I enjoy – 4 (or more) years of
– Job opportunities in school
more places – No guarantee of a job
when I get out
– What if I change my