1. Scarcity and the Science of Economics
Chapter 1 : Lesson 1
Scarcity and the Science of Economics

2. Essential Question
What basic choices are faced by all societies?

3. Imagine…
A storm has damaged the main highway leading to your town, so there have been no deliveries of essential, or even nonessential, items to neighborhood stores. Some people are running out of certain things they need or want. Others have lost electric power, and some have no running water. On the next slide is a list of things you have that some of your neighbors are looking for. For each item, explain at least one way you think is best (and perhaps fairest) to distribute these items among your neighbors.

4. a. One loaf of bread
b. One bicycle
c. An assortment of handyman tools in one toolbox
d. One bottle of aspirin
e. One half-full bottle of antiseptic and 10 cotton balls
f. Two one-gallon jugs of bottled water
g. One cellular smart phone
h. Three blankets
i. Ten towels
j. One MP3 player

8. Question
Does anyone know the word for the fundamental problem that we all face?

9. SCARCITY

10. Vocabulary
Scarcity: the condition that results from society not having enough resources to produce all the things people would like to have

11. Scarcity: What would parents choose? What would kids choose?

12. Vocabulary
Economics: the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources
What is the difference between a need and a want?

13. What is the difference between a need and a want?

14. Needs: necessary for survival Air, food, shelter
Wants: item we desire but do not NEED to survive
If we cannot have everything, how do we make decisions???

15. Categorize the following into need or want:
Food
Gatorade
Pizza
Sodium
Water
Sun block
Igloo
Cadillac Escalade
Love
Gasoline
A weapon
Freedom
Fire
Which category is broader, want or need?

16. 3 Basic Questions a Society Must Face

17. THE MARKET SYSTEM AT WORK
The Three Fundamental Questions...
1. What will be produced with our scarce resources?

18. THE MARKET SYSTEM AT WORK
The Three Basic Questions...
1. What will be produced?
2. How will the goods be produced?

19. THE MARKET SYSTEM AT WORK
The Three Fundamental Questions...
1. What will be produced?
2. How will the goods be produced?
3. Who will get the goods and services?

20. Basic Economic Concepts
Goods
Useful items; tangible
Services
Work performed for someone
else
Consumers
Users of goods and services

21. Types of Goods Consumer – for personal use
Example – happy meal
Capital - used for production
Example – hammer, tractor

22. Durable – lasts 3+ years.
Ex: appliances, cars
Nondurable – immediately used up
Ex: – food,paper

23. Value, Utility and Wealth

24. Value Worth of a good or service as determined by the market
Expressed in dollars and cents
Must be scarce
and useful

25. The Paradox of Value What is a paradox?
The paradox of value is the contradiction that occurs when essential items have a low economic value, and nonessentials have a high economic value.
AKA the diamond/water paradox

26. Which is better?
$10,000 gift v. $100,000 loan?

27. Utility Capacity to be useful Ability to provide satisfaction
Usually depends on person.

28. Wealth
Having goods with value and utility.
DOES NOT INCLUDE SERVICES

29. Review Question:
Chapter 1 : Lesson 1
Read pages 6-12 and answer Review Questions on page 12. Hand in Google Class Room.

30. Question #6
6. Argument Do you think there are any policies or steps that a society can take to avoid scarcity, at least in terms of supplying all the needs of its population? Write an argument for or against the concept that scarcity can be prevented by a society. If you argue that this is possible, describe the steps that can be taken to achieve this. If you argue that this is not possible, explain what makes it impossible.