1. To begin... Make a list with two columns, ‘wants’ and ‘needs’.
19/09/2018
To begin...
Make a list with two columns, ‘wants’ and ‘needs’.
In each column, try and think of ten things that you, right now in your life, want or need, and write a price (estimate) for these.
Total the price of this list at the bottom.
Then below this total, write down your monthly income...
Theme 1 – Microeconomics The economic problem

2. Homework – Net migration Qs
19/09/2018
Homework – Net migration Qs
Due Tuesday 15th September - Period 2
Ensure your name is on it and I will collect it now
Theme 1 – Microeconomics The economic problem

3. Year 12 AS Economics
Ms Haron

4. Start of lesson drills Planner on the desk Pen/stationary available
19/09/2018
Start of lesson drills
Planner on the desk
Pen/stationary available
Folder/Exercise book on the desk
Date and title copied
1.1.3 The economic problem
Ready to learn
Reminder of expectations every lesson
Theme 1 – Microeconomics The economic problem

5. Theme 1 1.1 – The nature of Economics
1.1.3 The economic problem
a) The problem of scarcity – where there are unlimited wants and finite resources
b) The distinction between renewable and non-renewable resources
c) The importance of opportunity costs to economic agents (consumers, producers and government)

6. Last lesson we covered:
19/09/2018
Last lesson we covered:
Thinking like an economist: the process of developing models in economics, including the need to make assumptions
The use of the ceteris paribus assumption in building models
The inability in economics to make scientific experiments
The difference between Positive and Normative economics
Theme 1 – Microeconomics The economic problem

7. Today Scarcity The Economic Problem Opportunity cost
19/09/2018
Today
Scarcity
The Economic Problem
Opportunity cost
Renewable and Non-Renewable Resources
Theme 1 – Microeconomics The economic problem

8. 19/09/2018
Why do we do Economics?
The word economics comes broadly from the Greek meaning ‘management of the household’. What we take this to mean today is the management of resources, and the ‘household’ is the perspective we take, be it a single firm, a nation or the global economy
The reason we need to consider the management of these resources is the result of the economic problem.
Theme 1 – Microeconomics The economic problem

9. 19/09/2018
The Economic Problem
This is the central issue of economics. Put simply, it states that we, as human beings, have an unlimited number of things that we want or need. Unfortunately, we live in a world that has limited resources.
As a result, we are in a potentially difficult situation where we want more than we can have.
Economics is the result, and studies how this problem can best be managed (NOT resolved)
Theme 1 – Microeconomics The economic problem

10. Unlimited Wants and Needs
19/09/2018
Unlimited Wants and Needs
Go back to the list you made at the start of this lesson. Is it exhaustive?
If I offered you £20, with no catch, would you take it? And if I offered you another....
Theme 1 – Microeconomics The economic problem

11. 19/09/2018
Scarcity
Now look at the difference between the two figures, you all probably have a bigger wishlist than the money you get can afford.
This is true not just for individuals, but for firms (companies), countries, and the world as a whole.
The important term we use to describe this lack of resources is ‘scarcity’.
Theme 1 – Microeconomics The economic problem

12. 19/09/2018
Scarcity
Scarcity – a situation that arises when people have unlimited wants in the face of limited resources
More prevalent in LEDCs but is also true of more prosperous countries like the UK
Do not confuse it with poverty. Poverty is where individuals lack the necessities of life but relatively rich people face scarcity as resources are limited
Theme 1 – Microeconomics The economic problem

13. Scarcity and choice Scarcity forces people to make choices
19/09/2018
Scarcity and choice
Scarcity forces people to make choices
Each individual much choose which goods and services to consume. To do this they would prioritise the options into things they need and things they want
On a national level, governments have to make choices between alternative uses of resources
Theme 1 – Microeconomics The economic problem

14. 19/09/2018
Scarcity and choice
It is this need to choose that underlies the subject matter of economics. Economics analysis is all about analysing those choices made by individual people, firms and governments.
For example, over six million people travel into London each day and they make decisions about when to travel, whether to use the bus, the tube, to walk or cycle or work from home. Millions of decisions are taken, many of them are habitual – but somehow on most days, people get to work on time and they get home too in safety if not in comfort!
Theme 1 – Microeconomics The economic problem

15. 19/09/2018
Opportunity cost
When you choose to consume a good, you do so at the cost of the next best alternative in your list of priorities
Opportunity cost is the cost of the next best alternative forgone
E.g. Cinema: Ice cream/popcorn
Theme 1 – Microeconomics The economic problem

16. 19/09/2018
Opportunity cost
Andrew has just started his AS and has chosen to take economics, mathematics, geography and French. Although he was certain about the first three, it was a close call between French and English. What is Andrew’s opportunity cost of choosing French?
Theme 1 – Microeconomics The economic problem

17. Opportunity cost NHS activity Remember this:
19/09/2018
Opportunity cost
NHS activity
Remember this:
You have a fixed budget of £200,000
Consider how that budget might be allocated to treatments
Justify your rationale
Theme 1 – Microeconomics The economic problem

18. 19/09/2018
Theme 1 – Microeconomics The economic problem

19. 19/09/2018
Theme 1 – Microeconomics The economic problem

20. Examples of base cost for a range of treatments
19/09/2018
Examples of base cost for a range of treatments
Base cost – this is usually excluding the costs of pre-treatment, GP appointments, post-procedure care and follow-up care.
Costs are higher for patients who need an extended stay in hospital
Base costs for (costs have been rounded up for ease of use)
Planned caesarean-section in NHS hospital £2,400
Natural birth in NHS hospital £1,800
Abdominal hernia repairs £2,300
Hip replacement £8,900
Liver transplant £70,000
Gastric (stomach) by-pass £5,000
One round of IVF treatment £6,000
Bone marrow transplant £70,000
Heart transplant £43,000
Cochlear Implant £17,000
Kidney transplant from heart-beating donor £15,000
Kidney transplant from non-heart-beating donor £13,600
Plasma exchanges (20 or more) £9,700
Theme 1 – Microeconomics The economic problem

21. Renewable and Non-Renewable
19/09/2018
Renewable and Non-Renewable
However, all is not doom and gloom! Some resources are ‘infinite’, in that given time, they can be renewed.
More on that in the next lesson
Theme 1 – Microeconomics The economic problem

22. Today we have covered 1.1.3 The economic problem
19/09/2018
Today we have covered
1.1.3 The economic problem
a) The problem of scarcity – where there are unlimited wants and finite resources
c) An introduction to the importance of opportunity costs to economic agents (consumers, producers and government)
Theme 1 – Microeconomics The economic problem

23. Plenary - Scarcity What does the existence of scarcity mean?
19/09/2018
Plenary - Scarcity
Resources Wants Scarcity Choice
What to produce? How to produce? For whom to produce?
What does the existence of scarcity mean?
Economies are inefficient
Economies are developing
Households, firms and governments have to make choices
It is not possible to increase the quantity of resources
Theme 1 – Microeconomics The economic problem

24. Plenary – Opportunity cost
9/19/2018
Plenary – Opportunity cost
The best alternative forgone.
A young woman decides to go to university to study full time. What is the opportunity cost of this decision?
The income she could have earned in a job
The income she earns when she leaves university
The qualification she gains at university
The tuition fee she has to pay

25. Homework – No HW today! No formal homework.
19/09/2018
Homework – No HW today!
No formal homework.
To “be more” – research/read about renewable resources in Economics
Theme 1 – Microeconomics The economic problem

26. 19/09/2018
Expectations
Theme 1 – Microeconomics The economic problem