Scarcity

Why do you think some goods are more valuable than others? Question… Why do you think some goods are more valuable than others?

Scarcity Scarcity exists when there is not enough resources to satisfy human wants.

Real World Example One of the most widely known examples of resource scarcity impacting the United States is that of oil. As global oil prices increase, local gas prices inevitably rise.

Hurricane Katrina During natural disasters like Hurricane Katrina, gas prices skyrocketed. Before Hurricane Katrina hit, gas prices were around $2.50 per gallon After Hurricane Katrina hit, gas prices soared to around $6.00 per gallon

SCARCITY Scarcity - fundamental economic problem because resources are limited Economics is the study of choices that an individual, a business, or a country has to make in dealing with the problem of scarcity.

T-Chart Needs Wants

Needs versus Wants Needs are basic for survival, for example food, basic clothing, and shelter. We have unlimited wants ex: lottery

Scarcity List five things that are scarce in your life. These are things that you don’t have enough of or you think you don’t have enough of.

Using Vocabulary- “Scarce” Pick one of the examples you wrote down and write a few sentences describing your experience of wanting an item that is scarce, and explain how you coped without it.

What is economics? https://www.youtube.com/watch?v=3ez10ADR_gM

Resources When we talk about limited resources in economics we mean very specific things. We are talking about productive resources or “factors of production” These factors of production are: labor, land, capital and entrepreneurship.

Factor of Production 1. Labor or Human resources - any physical or mental effort used to provide goods and services

Factor of Production 2. Land - “gifts of nature”-- not created by human effort. Natural resources Ex. Gas, oil, minerals, wind power, solar energy, animals, etc.

Factor of Production 3. Capital: physical -made goods used to produce other goods & services. (machine or tool) Also known as capital goods - different from consumer goods.

Capital – continued There are two different types of Capital. Physical capital or “real capital” refers to tools, machinery, factories, roads, airplanes, stores, warehouses, etc. Human capital includes such things as a college degree or good job training. Human capital is basically knowledge. Education increases your human capital.

Factor of Production 4. Entrepreneurship - a person who creatively combines the other factors of production; he/she takes a risk in order to make a profit.                   Bill Gates Mark Zuckerberg Mark Cuban

Payment for Factors of Production 4 Types of Payment Labor-Wages Land-Rent Capital-Interest Entrepreneurship-Profit

Factors of Production Video This video talks about 4 Factors of Production; however, #3 and #4 are physical capital and human capital. It leaves out Entrepreneurship as a Factor of Production. https://www.youtube.com/watch?v=ZMaYplbpQn8

Factors of Production Example Coffee shop? (Entrepreneur, Land, Capital, Labor) Entrepreneur, the owner of the coffee shop Land, for the coffee beans and for the shop itself Physical capital, coffee maker, coffee grinder, cash register, computer to keep track of finances, etc. Human capital? Labor, the barista

Factors of Production Example Come up with your own “factors of production” example.

3min video – Basic Economics https://www.youtube.com/watch?v=sLxCcreJWtw