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Do Now

  • Identify five wants that you have right now.

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  • Then describe how scarcity affects your efforts to meet these wants.

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Terms worth Reviewing

  • Wants – Desires that can be satisfied by consuming a good or a service.
  • Needs – things that are necessary for survival
  • Utility- Usefulness to you. This is not fixed (glass of water)
  • Economic Value- determined by having Utility & Scarcity
  • Trade Off – The alternative someone gives up when making an economic choice.

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  • Opportunity Cost – A benefit, profit, or value of something that must be given up to acquire or achieve something else.

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Trade off vs. Opportunity Cost

  • Two economic terms are often misconstrued, trade-off and opportunity cost. A trade-off denotes the option we give up, to obtain what we want.

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  • On the other hand, the opportunity cost is the cost, or value of the second best alternative given up to make a choice. In other words, it is the cost of the opportunity that is missed and so it makes a comparison between the project accepted and the rejected one.

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Let’s Practice

  • You have won $1,000 in a contest. Make a list of possible uses for that money.

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  • Then draw up a plan for spending it, dividing it up any way that you like.

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  • Finally, write a short paragraph explaining the trade offs involved in your choices and identify the opportunity costs.

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I Want an A

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  • I assume all of you want an A in this course.

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  • Describe how scarcity affects your efforts to meet these wants.

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Scarcity and the Three Questions

  • Scarcity in the lives of individual consumers - the gap between their unlimited wants and limited resources – is fairly easy to understand.
  • Scarcity, however, also confronts producers and whole societies and requires every society to address three basic economic questions.

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  • What will be produced?

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  • How it will be produced?

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  • For whom will it be produced?

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How to answer the What, How, and for Whom?

  • Take 5 minutes and read through pages 8 – 9 in your textbook.

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How do countries answer the 3 economic questions?

  • Step 1 – Choose a country

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  • Step 2 – Use CIA World Factbook or Human Development Index

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  • Step 3 – Complete the Inquiry Activity

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