1. Play Dough Economics Cornell Cougar Company Lesson 3 2010-2011 Tuchek

2. Scarcity: We Can’t Have Everything We Want We live in a world of scarcity. This means that the desire of goods and services exceeds the productive resources (land, labor, & capital) available to satisfy those desires. In other words, the things of value that people want are virtually unlimited, while the productive resources necessary to produce these things are limited. Every society must determine how to best use its scarce productive resources to produce goods and services. This is the basic economic problem.

3. Scarcity The goods & services that are produced from scarce productive resources are themselves scarce. The goods & services which are highly valued & which are more limited in supply are relatively more scarce than those which are not highly valued & which are more abundant in supply. What are some things (goods) at home that you value highly?

4. A simple rule to help you determine whether an item is scarce: Is the item made freely available? Does more than one person want it? If yes, then the item is considered scarce.

5. Scarcity Example…  A teacher who offers a free pencil to the class will discover that more than one child wants the pencil.  In this situation, the pencil is scarce.  If a piece of gold were offered, the same thing would happen. However, if students are freely offered a pencil or the gold, most will choose the gold.  In economics both items are considered scarce, but since gold is relatively more scarce, it commands a higher price.

6. Air we breath in class Snow in a blizzard Salt water Sand at the beach Can you identify other things that are not scarce? Things that are NOT Scarce:

7. Discovery Education http://streaming.discoveryeducation.com/ Understanding Economics & Scarcity

8. Play dough Time… You will make some scarce goods out of play dough today. Use your productive resources (land, labor, and capital), as in Lesson 2, to produce your scarce good. Share and discuss sculptures. Does your good follow the “scarcity rule”? Each time, make something that is more scarce than the first item you produced.