WarmUp In last nights homework the author gave

Warm-Up In last night’s homework, the author gave some examples of formerly scarce, (hard to find), businesses that now are abundant, driving the profit margin down. 1) Using what you read last night, what is the connection between scarcity and price? 2) Think about what’s around you every day. Is there anything you think is scarce enough to be able to make money off of? In other words, do you see any needs that you could one day fill in the marketplace?

WHAT IS ECONOMICS?

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Defining Economics What fundamental qualities make up Economics? Versus Wants Needs

Then what is the definition? Economics is the study of how scarce productive resources are used to satisfy human’s unlimited needs & wants.

3 Economic Questions What goods and services should be produced? How should the be produced? For whom should they produced? You decide to start your own chocolate factory. Answer the 3 Economic Questions:

Once you move out of your parent’s home, you may be “feelin' so alone” and find the creature comforts that Mom and Dad have are scarce.

Scarcity: The condition of wanting more than we can get with available resources. On a personal level: you can only buy and do so many things. On a national level: A country can only produce so many things. How do we decide what to use our resources on?

The Condition of Scarcity Our resources are limited…but our desires for goods and services are NOT. Something is scarce if it has more than one valuable use. Consider your time. When resources are used to do one thing, they are unavailable to do others. 9

To Choose Is To Sacrifice Scarcity forces us to make choices. Choosing an action means we sacrifice doing something else. The opportunity cost of a choice is the value of what is given up [THE NEXT BEST ALTERNATIVE]. 10

Scarcity is correctly described by which of the following statements? I. Scarcity exists if there are more uses for resources than can be satisfied at one time. II. Scarcity exists if decisions must be made about alternative uses for resources. III. Scarcity would not exist in a society in which people wanted to help others instead of themselves. (a) I only (b) II only (c) III only (d) I and II only (e) I, II, and III

Who makes these decisions? Consumers – the people who decide to buy things What is the incentive of the consumer? Get the most of what they value from their expenditures, BUT they are constrained by their budget.

What’s the Difference between a Need and a Want? Those goods and services that are necessary for survival Food, clothing, shelter Those goods and services that people consume beyond what is necessary for survival

Human wants are: a) Always fixed b) Limited c) Unlimited d) Likely to decrease over time

Producers – The people who make things that satisfy consumers’ needs and wants. What is the main incentive of the producer? Provide consumers with what they value the most while covering their costs of production and making a profit.

What are goods and services? Physical objects that can be purchased Pizza, bicycle, shoes Actions or activities that are performed for a fee. Lawyers, teachers, plumbers

In economics the central problem is 1. 2. 3. 4. 5. production. scarcity. allocation. consumption. money.

Our economy is characterized by: 1. 2. 3. 4. 5. unlimited wants and needs. unlimited material resources. no energy resources. abundant productive labor. no way to achieve satisfaction.

Eliminating the scarcity problem would: 1. 2. 3. 4. 5. eliminate the need to study economics. increase the need to study economics. divert resources from government activity to education. eliminate the possibility of a "free lunch. ” divert resources from hot fudge sundaes to highway construction.