True or False? Abundant resources cannot be scarce. Small amount of an item make it scarce. It is useful and easy to distinguish between wants and needs. Economic reasoning is difficult. Economics is about money. People often find themselves in economic situations where they have no choices.

Scarcity , Choice, and Economic Reasoning Introduction into Economics and Economic Thinking

Objectives Understand how scarcity forces people to choose how they will use resources to satisfy human wants. Understand how economic reasoning can help students explain puzzling human behavior. Understand the concepts and rational underlying the Guide for Economic reasoning.

Economic Reasoning All social phenomena emerge from the choices that individuals make in response to expected costs and benefits to themselves. Buy a car? Buy New ? Used car? Leased New? Buy Off Lease? Dealer or E bay? What are the costs and benefits to you?

Scarcity A condition that exists when a resource has at least 2 valuable uses. Limited quantities of resources to meet unlimited wants. Everything is scarce. Everyone must make decision on which scarce goods to obtain.

Factors of Production The 3 groups of resources that are used to make goods.

Land Natural resources that are used to make goods and services. Forrest Coal

Labor The effort that people devote to a task for which they are paid. Teacher Lawyer Grocery clerk Garbage man Mowing lawns Mob “Hitman” Pharmacists

Capital Any human made resource that is used to create other goods and services.

Defining Scarcity People must want it in order for it to be scarce. Small Pox Hamburger to a Vegetarian Fur Coat to a PETA Member

Wants Versus Needs Transportation Shelter Recreation Clothing Food Education Telephone or Cell Phone

Wants Versus Needs The concept of “need” is not helpful when trying to explain or anticipate human behavior Needs – no choice regarding behavior Fulfill your needs and then go after your wants Wants – choice with regards to behavior Not necessary for survival You will not die without your cell phone no matter what you believe.