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Scarcity Notes

The document discusses the concept of scarcity, highlighting how limited resources must be managed to satisfy unlimited wants and needs. It explains the differences between needs and wants, the causes of scarcity, and various strategies to cope with it, such as doing without, creating more resources, and better resource utilization. Additionally, it covers economic concepts like trade-offs and opportunity costs, emphasizing the implications of choices made in the context of education and career decisions.

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18 views

Scarcity Notes

The document discusses the concept of scarcity, highlighting how limited resources must be managed to satisfy unlimited wants and needs. It explains the differences between needs and wants, the causes of scarcity, and various strategies to cope with it, such as doing without, creating more resources, and better resource utilization. Additionally, it covers economic concepts like trade-offs and opportunity costs, emphasizing the implications of choices made in the context of education and career decisions.

Uploaded by

plfj.2021
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Scarcity

How we deal with not having enough stuff

Food for Thought-


By graduating from highschool, how much more money will you make over someone who never
graduated from high school over a lifetime?

$283,500 more over lifetime or $9,500 more per year

By graduating from college, how much more money will you make over someone who never
graduated from college over a lifetime?

$918,000 more over lifetime or about $30,000 more per year

What is economics?
-​ The study of how people satisfy their needs and wants

We tend to use money to purchase our needs and wants. Bartering (trading one thing
for another) and making yourself are other methods.

What are NEEDS?


-​ Needs are the things that someone has to have to survive

Food
Water
Shelter
The BARE NECESSITIES!

What are WANTS?


-​ those things that you would like, but do not need to survive.

Ex. Car
iPad
Concert Tickets
Scarcity
-​ A limited amount of resources to meet unlimited wants and needs
EVERYTHING is scarce!

Why do we have Scarcity?


We have unlimited wants and needs but limited resources create scarcity. Therefore, we need to
make choices of what to produce, how to produce, and for whom to produce.

Causes of Scarcity
1.​ Personal Perspective: your own feelings of what is needed or wanted.
a.​ “I’m starving!”
b.​ “I’m broke!”
2.​ Poor Distribution of Resources: not using your resources to their full potential
a.​ “I never have any time- yet I watch 6 hours of television a day!!”
b.​ “I don’t have enough money for college, but I have to have a pair of $200
sneakers!”
3.​ Rapid Increase in Demand: A sudden rush to use resources can cause a shortage.
a.​ Tickle Me Elmo
b.​ XBox / Playstation
c.​ Beanie Babies

Ways to deal with Scarcity


1.​ Doing without something
a.​ “Shut up kid- you’ll get nothing and like it.”
b.​ “I’ll go to the prom, but not to the senior trip.”
c.​ “Instead of driving to the theater, let’s watch a movie on cable and save gas
money.”
2.​ Create more resources
a.​ “I’ll get a second job.”
b.​ “We’ll drill for more oil in Alaska.”
3.​ Making better use of our resources
a.​ “While I watch television, I will grade papers.”
b.​ “I’ll take my date to a matinee movie and use a BOGO coupon for dinner!”
c.​ “If we carpool to work, it’ll save gas money.”
Real costs
-​ All of the resources used to produce a good or service

Most resources can be used for only one thing at a time

Ex. Real costs of building a bridge instead of a building


-​ Construction workers
-​ A crane
-​ Steel

Trade Offs
-​ When you choose between two possible uses for a resource, giving up one alternative
for another

Ex. Bridge vs. Building


I can either buy this book or pizza, but not both.

Opportunity Costs
-​ When you make a trade off, there are costs. The value of time, money, goods, and
services given up in an economic choice. The #1 alternative is the Opportunity Costs.

-​ By doing this, I give up the opportunity to do that.

If we build the bridge, we can't build the building


If I buy the pizza, I can’t buy the book

Goods
-​ Physical objects such a baseballs or umbrellas

Land
-​ Natural resources used to produce goods and services

Labor
-​ The work that a person does for payment
Trade off: Sleep vs. Study

Options Benefits Opp. Cost

1 hour on extra C on the test 1 hour of sleep lost


study time

2 hours of extra B on the test 2 hours of sleep lost


study time

3 hours of extra B+ on the test 3 hours of sleep lost


study time

What is the Opportunity Cost of Going to College?

Benefits Opp. Costs

Higher Income Costs a lot of money


More Job Opps Student loans for years
Job Opps in a career I enjoy 4 (or more) years of school
Job Opps in more places No guarantee of a job when I get out
What if I change my mind?

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