What is Economics? What is Scarcity? Why does scarcity affect us at all times?

11
What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Transcript of What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Page 1: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

What is Economics?

What is Scarcity?

Why does scarcity affect us at all times?

Page 2: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

What are wants and needs? Needs = must have to survive items:

Food, clothing shelter, air, water etc.

Wants= things we’d like to have but they are not necessary for survival- unlimited!

Page 3: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

How do we satisfy those unlimited wants and needs? We use our very limited resources of

course?

This is called Scarcity!

Page 4: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Because we all have unlimited wants and needs but suffer from limited resources we always face the problem of Scarcity– we must choose wisely.

We can buy Goods & Services to satisfy that utility. But which do I choose?

Page 5: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Sometimes those goods and services are temporarily unavailable.

Economists call that a ShortageSold Out

Page 6: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

What are Goods and Services made of?The Legos of Economics

Factors of Production Land

Labor

Capital

Entrepreneurship

Page 7: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

What goes into your empty box? Human Capital

Our knowledge, skills and abilities

Page 8: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

How can we maximize our Utility? = Efficiency*** We weigh our choices and compare

benefits to the costs of each alternative

Economists call this Tradeoffs and Opportunity costs

Page 9: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Tradeoffs = perceived value To Adam Smith and his concept of the

market economy-(laissez faire)

Those values are best determined by the individual

Page 10: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Opportunity Cost = next best alternative to the chosen value

Page 11: What is Economics? What is Scarcity? Why does scarcity affect us at all times?

Is there an economic way to evaluate these complex choices?= Graphs

Production Possibilities Curves

Resource Schedules