How people behave in a world of limited resources and unlimited wants.
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Transcript of How people behave in a world of limited resources and unlimited wants.
How people behave in a world of
limited resources and
unlimited wants
Identify needs from the following categories
• Transportation• Shelter• Pets• Recreation• Clothing• Food• Education• Telephone
Identify needs from the following items
• Van Camps Pork and Beans
• Apt. 210, 1505 Garfield Ave., Tacoma, WA
• German Shepard dog• Coleman Oasis tent• Whamo Popcorn• Levi’s jeans• Purdue University college
degree• Skippy’s Peanut Butter
• Van Heusen long sleeve shirt
• Oscar Meyer Wieners• Texaco unleaded• Miller Lite• Dairy Gold 2% milk• Air Jordans• Fruit of the loom briefs• Kingsborough Community
Associate degree• Aquafina bottled water
WANTS AREUNLIMITED
Needs and wants is a false distinction for economists –
Economics is all about choice
“What kind of food do you want?” is an economic question
Resources
Are
Limited
Because Resources are LIMITED and
Wants are UNLIMITED
• THERE IS A NEED TO
MAKE DECISIONS or TRADEOFFS
• THE COST of selecting ONE choice – IS GIVING UP ANOTHER
THIS IS CALLED
OPPORTUNITY COST
Usually choices are not of an “all or nothing” nature-
although we’re all familiar with the “clean your room, or else”
ultimatum
So economists define opportunity cost as the alternative forgone
The non-price value of any choice is the next best alternative –
Think about selecting your college