The Economic ProblemAS Economics

Aims and Objectives

Aim:

• To understand the nature and purpose of economic activity and scarcity.

Objectives:

• Define economic problems.

• Describe the economic activity and problems associated with scarce resources.

Wants and Needs

• Think of 3 things you want....

• Think of 3 things you need....

The Nature and Purpose of Economic Activity

• The economic system provides for peoples’ wants and needs in the form of goods and services.

An Economic System attempts to solve the

following problems:

1. What should we produce?

2. How should we produce it?

3. For whom should it be produced?

Economic Welfare

• If an economic system organised the wants and needs of people effectively we would see people’s economic welfare increase.

• Economic welfare is the benefit or satisfaction gained from the allocation of resources.

The Resource Allocation Game

• 4 countries: UK, France, South Africa & India.

• Make and trade a shape which is being demanded from the market.

The Resource Allocation Game Rules

• The object of the game is to make as many shapes and accumulate as many points as possible. The value of each shape is given on the board.

• Shapes must be to the exact measurements given, the judge’s decision is final.

• Groups may trade or barter with each other, for materials or equipment. Any unsuitable behaviour must be reported at once to the judges.

• A running total of the scores will be displayed on the board.

• At any time changes with regard to: value of shapes, additional information or equipment, changes in trading etc. can be dispensed at the discretion of the judges.

• The winner is the team with the most points scored. The aim of the game is to win.

Products Demanded. #1

5

5

White Squares

5cm X 5cm

20 Points for a set of 3 squares.

Measurements must be

accurate!!!

Products Demanded. #2

• White Squares

• 10cm X 10cm

• 30 Points for a set of 3 squares.

• Measurements must be accurate!!!

10

10

Products Demanded. #3

• Blue Squares

• 10cm X 10cm

• 50 Points for a set of 3 squares.

• Measurements must be accurate!!!

10

10

Products Demanded. #4

• Blue Circles

• 10cm diameter

• 70 Points for a set of 2 circles.

• Measurements must be accurate!!!

10

Products Demanded. #5

• White Squares

• 10cm X 10cm

• 60 Points for a set of 3 squares.

• Measurements must be accurate!!!

10

10

Products Demanded. #6

• Blue Squares

• 5cm X 5cm

• 90 Points for a set of 3 squares.

• Measurements must be accurate!!!

5

5

Scarcity of Resources

TASK: Describe what happened in the game.

• Resources are scarce in economies and include: Land, Labour, Capital and Enterprise.

• Resources are not always allocated fairly, which means that economic welfare is different between people and indeed nations.