SCARCITY INVOLVES CHOICE Choice Involves Cost

SCARCITY? Wants > Availability or Unlimited Wants > Limited Resources There is never enough Key Concept

For the individual Time Money For society Factors of production WHAT IS SCARCE?

WHAT IS SCARCE FOR SOCIETY? Resources:  Natural resources (land)  Human resources (labor)  Capital resources (man made)  Entrepreneurship

NaturalHumanCapitalEntrepreneur INPUTS TO THE PRODUCTION PROCESS Resources that occur naturally in the environment Examples? Efforts by humans that add to production. Examples? Human made resources that add to production. Examples? One who organizes, manages and assumes the risk of a business *Boundaries *Difficult and costly to obtain *Lack of technology *Running out *Weather conditions *Only some people willing and able to work *Lack of training/skill *Wrong location *Amount of labor and natural resources available to produce them and money available to purchase them *Existing state of technology *Availability of money – borrowed *Business climate *Laws and regulations Resources = Factors of Production What conditions result in scarcity of each category of Factors of Production?

SCARCITY  Economics is: a study of choice Choice

SCARCITY  CHOICE

THE DISMAL SCIENCE! There’s no such thing as a free lunch!

Allocate: Distribute for a particular purpose What will your purpose be?

SCARCITY AND CHOICE: THE ALLOCATION OF ORGAN TRANSPLANTS Part of the urinary system Bean shaped organs Size of a fist Middle of the back below the rib cage Process the blood to remove waste from blood and chemically balanced This waste become urine

KIDNEY TRANSPLANTS When kidneys don’t function properly or fail sometimes they need to be replaced Kidney Transplant Living Donor (Family or Friend) Unrelated Donor (Died) LocationRegisteredCandidates United States106,49799,201 Region4,2574,212 Colorado1,7151,709

“YOU CAN’T HAVE IT ALL! Trade offs: Sacrifice one thing to obtain another Only enough money to buy….. Or

Key Concept Choice involves cost » opportunity cost

DEMONSTRATION

CANDY BAR ACTIVITY Opportunity cost  Opportunity lost  Value of the best foregone alternative  “Choosing is refusing”  choose A, refuse B –  cost of A is value of B Most important concepts in economics!!!!!

COPENHAGEN CONSENSUS Danish statistician, Bjorn Lomborg List of global challenges identified by U.N. Invited 8 top economists in world  three Nobel Laureates in Economic Science Task: Rank order in terms of benefits & costs  where should the world spend $ most productively

Why not do all?... in a perfect world we would Scarcity

Assignment: There is no such thing as a free lunch

SCARCITY CHOICE COST … and since choice involves cost Why choose it? Assume that:  People choose X if:  B enefit (X) > C ost (X)  Otherwise, not  B enefit (X) < C ost (X)

PROSTITUTION? GOOD PROFESSION?