Define Scarcity

1
Define Scarcity

• The fundamental problem of economics
• The economic condition that results when there
  are too few economic resources to satisfy all the
  economic wants and needs.

2
Define Economics

• The study of human efforts to reduce scarcity.

3
Define economic need

• A basic requirement for survival or well being.
• Give some examples
• Food, clothing, shelter, transportation.

4
Define economic want

• The desire for an economic good or service.
• A desire which expresses an economic need.
• Give some examples
• Any good or service
• Give examples of related wants and needs, and
  visa versa.
• Want for a hamburger expresses a need for food.
  
• A need for clothing may lead one to want a new
  shirt.

5
What are the three basic questions every society
must deal with?

• What to Produce
• Examples, guns or butter, consumer goods, defense
  goods
• How to Produce
• Examples Manual labor, machines.
• For Whom to Produce
• Examples Young or old Men or women.

6
Define production

• The use of economic resources, or factors of
  production, in the making of economic goods and
  services.
• Examples
• Farming, construction, teaching, nursing

7
What are the factors of production

• Land
• Labor
• Capital
• Enterprise, sometimes thought of as a labor
  resource.

8
Define land

• The natural resources used in the production of
  economic goods and services.
• Give examples
• Forests, farm land, coal deposits

9
Define Labor

• The human effort or work used in the production
  of economic goods and services.
• Give examples
• Driving a tractor, chopping wood, mining coal.

10
Define capital

• IN THIS CLASS IT IS NEVER MONEY
• Man made goods used in the production of economic
  goods and services.
• Give examples
• Tractor, saw, shovel, computer.

11
Define enterprise

• Risk taking in hopes of making a profit.
• Give example
• Buying a lawn mower to mow lawns with the idea of
  earning a profit in order to better satisfy
  your wants and needs.
• The risk is that no one will hire you and you
  will lose money.

12
Define economic goods and services, aka economic
products

• Goods are tangible items that are useful, scarce,
  transferable and satisfy an economic want or
  need.
• Service is human work or labor that is useful,
  scarce, transferable and satisfies an economic
  want or need.

13
Give examples of economic goods.

• DVD player
• Pizza
• Shirt

14
Give examples of economic services

• Cutting hair
• Fixing fence
• Changing oil
• Teaching
• Waiting tables.

15
Define consumer goods

• Goods intended for final use by individuals for
  purposes of personal satisfaction of a want or
  need.
• Examples
• Shirt, Pizza, Movie

16
Define capital good

• Man made goods used in the production of other
  goods and services.
• Examples
• Desk, computer, chalk, chalk board.

17
Be able to explain the difference between a
consumer good and a capital good.

• A lawn mower is a consumer good when you use it
  to mow your own lawn for your own benefit.
• A lawn mower is a capital good when you use it to
  mow other peoples lawns in order to make a
  profit to help satisfy your wants and needs.

18
Define durable good

• Goods which last at least 3 years.
• Examples
• Desk, chalk board, text book

19
Define non-durable goods

• Goods which typically last less that three years.
• Examples
• Food, notebook, chalk, pencil, gasoline, etc.

20
Define Consumer

• One who uses up economic goods and services to
  satisfy wants and needs.

21
Define consumption

• The using up of economic goods and services to
  satisfy wants and needs.

22
How do we measure the value of economic products
and resources?

• With money.

23
What gives economic products and resources their
value?

• Their utility and scarcity.

24
Define utility

• The capacity to be useful and/or to provide
  satisfaction.

25
Define Scarcity

• Lacking sufficient quantity to meet all wants and
  needs.

26
Explain the paradox of value

• Some things may be very expensive and not very
  useful.
• Some things may be very useful but not expensive.
• Examples
• Diamonds and Professional athletes.
• Water and construction workers.

27
Define Wealth

• That which is tangible, useful, scarce and
  transferable.
• NOT money NOT services.
• Land, capital and consumer goods.
• Examples
• Coal, tractor, pencil

28
Define Economic model

• Words, tables, graphs, mathematical formulas used
  to illustrate or to teach economic concepts or to
  predict economic outcomes.
• No model is perfect. They serve a limited
  purpose and they are not intended to precisely
  represent reality.

29
Define Market

• Any coming together of buyers and sellers face
  to face, by mail, by phone, by internet.

30
Define Factor Market

• The coming together of buyers and sellers of
  factors of production or economic resources, ie.
  Land, labor, capital.
• Give examples from personal experience
• Paid wages to paint a house, sale of iron ore,
  sale of a combine to harvest wheat.

31
Define Product Market

• The coming together of buyers and sellers of
  consumer goods and services.
• Give examples from personal experience
• Buying school lunch or snack bar item.

32
Goods and services
1
Land, labor, capital
5
10
Producers
12
8
Income
Costs Expenditures
3
4
Outer ring is _________________
flow Inner ring is __________________ flow
Product Market
Real
Factor Market
Money
Payment for G S
Wages and salaries
11
7
2
Consumers
Goods and Services
Land, labor, capital
6
9
33
Define Economic System

• The means or mechanism by which a community tries
  to reduce scarcity.

34
What economic system does the U.S. use?

• Capitalism

35
What are some of the traits of Capitalism?

• Profit
• Profit Motive
• Self-Interest
• Economic Freedom
• Voluntary Exchange
• Savings

• Investment
• Capital
• Enterprise
• Private Property
• Sanctity of Contract

36
Define Profit

• The gains one makes over and above the costs of
  his investment.

37
Define Profit Motive

• desire to gain, mainly financially, which is the
  incentive behind any investment.

38
Define Self-Interest

• Making decisions to ones own economic advantage.

39
Define Economic Freedom

• Little govt intervention individuals allowed to
  make most economic decisions in their own best
  interest Laissez faire

40
Define Voluntary Exchange

• People are free to enter the market or not as
  they see fit.

41
Define Savings

• Absence of spending.

42
Define Investment

• The purchase of capital.

43
Define Capital

• the man made goods used to produce other goods
  and services.

44
Define Enterprise

• Taking a risk in order to profit.
• There is no guarantee a profit will result.
• The key trait of capitalism.

45
Define Private Property

• Ownership of economic resources by private
  individuals not govt.

46
Sanctity of Contract

• Enforceable agreements to perform service for
  fair consideration.

47
Take the above traits of Capitalism and write a
decent paragraph describing Capitalism.

• On your own.

48
Many think the U.S. is ceasing to be a capitalist
country. Do you agree? Why? Why not?

• On your own.

49
Define Economic Growth

• An increase in the total output of economic goods
  and services.
• The main goal of any economy

50
How do we measure economic growth?

• With GDP Gross Domestic Product

51
Define GDP

• the dollar value of all final goods and services
  produced by the economy in one year.

52
Approximately what is the GDP of the U.S.?

• 14,000,000,000,000

53
What are factors that contribute to economic
growth?

• Increased Productivity
• Division of Labor
• Specialization
• Human Capital
• Economic Interdependence

54
Define Increased Productivity

• The increase in output of a given unit of input
  in a given period of time.
• Most Common Example
• Increase in output per one hour of labor
• Say an increase from 5 widgets per hour to 6
  widgets per hour.

55
Define Division of Labor

• the arrangement of inputs, usually labor, to
  perform fewer tasks per laborer.
• Examples assembly line
• The idea being that if each unit of input has
  fewer tasks to perform it may perform them with
  greater efficiency.

56
Define Define Specialization

• Focusing inputs, again usually labor, on a
  limited number of tasks to increase efficiency
  and productivity.
• Example building a house carpenters, plumbers,
  electricians, roofers, landscapers, masons, etc.

57
Define Human Capital

• Education, training, skills, talents, and
  abilities of the labor force.
• The greatest resource of any economy.

58
Define Economic Interdependence

• The reliance of members of the economy on each
  other for economic goods and services and the
  benefit from each others efficiency.
• One could also term it comparative advantage.

59
What are the benefits of economic growth?

• Reduced scarcity and improved standard of living.

60
Define Opportunity Cost

• The economic good or service that one gives up in
  making an economic choice. The best alternative
  to the choice made in an economic decision.
• Example
• If you buy a new car you may have to forgo going
  to college.
• If you buy a candy bar you may give up buying a
  bag of chips.

61
Define Real Cost

• The land, labor and capital that one gives up in
  making an economic choice.
• For most of you which is it going to be?
• Labor

62
Define Dollar Cost

• The money one gives up in making an economic
  choice.

63
Define Opportunity Benefit

• the gain or advantage derived from making an
  economic choice.
• Give an example
• If one decides to buy an I-Pod, they may have the
  advantage of listening to their favorite music at
  many times and locations.

64
PPC What does the curve represent?
ANS Scarcity, or limited resources
65
PPC What does the point on the line illustrate?
ANS Full employment of rescources.
66
PPC What does the point on the curve illustrate?
ANS all resources devoted to the production of
Good A.
67
PPC What does the point on the curve illustrate?
ANS all resources devoted to the production of
Good B.
68
PPC What does the point inside the curve
illustrate?
ANS Less than full employment of resources.
69
PPC What does the point outside the curve
illustrate?
ANS an impossible level of employment of
resources, or a possible future level of
employment that might be achieved with the
development of new resources.
70
What is the opportunity cost and opportunity
benefit of moving from choice A to choice B?
A
ANS Opportunity cost 5 of A.
10
ANS Opportunity Benefit 10 of B.
B
Good A
5
10
20
Good B
71
What is the opportunity cost and opportunity
benefit of moving from choice B to choice A?
ANS Opportunity Cost 15 of B
A
16
ANS Opportunity Benefit 12 of A
Good A
B
4
15
30
Good B
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