Scarcity and Decision Making

Wants Physical Wants – needs that are necessary to sustain life (e.g. food, clothing, shelter) Psychological Wants – wants that are not essential to sustain life (e.g. gold jewelry)

SCARCITY Humans have unlimited wants but limited resources. Therefore we must make choices. Opportunity Cost-what you give up when you make a specific choice. (e.g. stay in school, the o.c. is a full time job) For something to be scarce, demand for it must exist. *Is salt water scarce in Saskatchewan? (in economic terms?)

MASLOW’S HIERARCHY of Needs NAUGHTY!

Resources & Goods / Services Human Resources – labour needed to produce goods and services (e.g. teacher) LABOUR Capital Resources – non-human processed resources used to produce goods and services CAPITAL (FACTORIES, MACHINES) Natural Resources – land and all unprocessed non-human resources used to produce goods and services LAND Goods – concrete visible things that satisfy human wants and that last a period of time Services – invisible things that cannot touched or seen (e.g. concert)

ScarcityDecision Making Opportunity Cost Human Wants > Resources = Scarcity Decision Making – can’t have everything because of scarcity Opportunity Cost – the decisions will mean we have to give up something to gain something else (e.g. Colin wants to go to NYC during the March Break or have a IPAD)

PRODUCTION POSSIBILITIES CURVE DISPLAYING OPPORTUNITY COST CONCEPT GUNS BUTTER

Summary Resources – Human / Capital / Natural Wants > Resources = Scarcity Scarcity  Decisions  Opportunity Cost Opportunity Costs – Goods & Services

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