1. Scarcity

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

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

4. 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.

5. 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

6. 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.

7. T-Chart
Needs Wants

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

9. 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.

10. 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.

11. What is economics?

12. 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.

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

14. 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.

15. 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.

16. 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.

17. 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

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

19. 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.

20. 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

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

22. 3min video – Basic Economics