Economics and Scarcity What is Economics Economics is

Economics and Scarcity

What is Economics? • Economics is the study of the choices that people make to satisfy their needs and wants. • Scarcity is the basic problem of economics because our needs and wants are always greater than our available resources.

Scarcity and Shortages • Scarcity occurs when there are limited quantities of resources to meet unlimited needs or desires • Shortages occur when producers will not or cannot offer goods or services at current prices

Two Definitions of Scarcity • A situation in which human wants are greater than the capacity of available resources to provide for those wants. • A situation in which a resource has more than one valuable use.

Determine whether the following do or do not illustrate the concept of scarcity. 1. Old economics textbooks collected in a bookcase near the teacher’s desk with a sign that says “Free books, take as many as you want. ” The books have been there for three years. Not scarce. No alternative valuable use.

2. Old economics textbooks collected in a bookcase near the teacher’ s desk with a sign that says “Free books, take as many as you want. ” Another sign posted in the hallway says “$10 paid for any recycled textbook. Bring books to the Principal’s office. ” • Scarce. The books may be read or they may be recycled. Two valuable uses.

3. One economics textbook, five students who wish to do well in the economics course, and an important test in class the next day. Scarce. The one book could be used by five different people; it has valuable alternative uses.

4. Petroleum in Japan, a country without its own oil fields and without oil reserves. Scarce. Petroleum has many valuable uses in Japan.

5. Petroleum in Saudi Arabia, a country with many oil fields and oil reserves. Scarce. Petroleum has many valuable uses in Saudi Arabia, and it can be sold to other people in other countries. Several valuable uses.

Which of the following statements is not consistent with the concept of scarcity? A. People are scarce because they have many valuable uses in the world. B. Trash is scarce because you rarely see much of it around unless you go to a landfill. C. Knowledge is scarce because what we wish to know is so great relative to what we do know at this time. D. Electricity is scare because it has many valuable uses.

Which of the following statements is not consistent with the concept of scarcity? A. People are scarce because they have many valuable uses in the world. B. Trash is scarce because you rarely see much of it around unless you go to a landfill. C. Knowledge is scarce because what we wish to know is so great relative to what we do know at this time. D. Electricity is scare because it has many valuable uses.

Which of the following people must deal with scarcity when they make decisions during the day? A. The richest person in the world. B. A homeless person living in New York City. C. A commuter living in the suburbs and working in the city. D. All of these people must deal with scarcity.

Which of the following people must deal with scarcity when they make decisions during the day? A. The richest person in the world. B. A homeless person living in New York City. C. A commuter living in the suburbs and working in the city. D. All of these people must deal with scarcity.