1. Scarcity and the Science of
Chapter 1 Lesson 1 Scarcity & the science of Economics
Chapter 1 Lesson 1
Scarcity and the Science of
Economics

2. Explain the fundamental economic problem.
Objectives:
Explain the fundamental economic
problem.
2. Examine the three basic economic
questions that every society must
answer.
List and use examples of the factors
of production.
4. Explain the paradox of value.
5. List & use examples for the different types of goods.

3. Economics: study of how people try to satisfy unlimited wants with
limited resources.
**#1 rule of economics:
TINSTAAFL
There Is No Such Thing As A Free Lunch

4. **Major Econ. Problem: SCARCITY --occurs when people do not
have enough resources to
produce all of their needs &
wants
--does not occur because
of lack of $
--ie=heart transplant

5. **4 Factors of Production
1. land
Must be
natural &
limited

6. 2. capital
Must be used
for production

7. 3. labor
The work
force (human
capital)

8. 4. Entrepreneurs
Risk takers in
search of a
new business

9. Phil Knight
Nike
Mark Cuban
Broadcast.com
Pierre Omidyar
Ebay
Evan Spiegel & Bobby Murphy
Snapchat
Mark Zuckerburg
Facebook
Warren Buffett--Berkshire Hathaway
Sean Combs
Bad Boy Records

10. 4 types of Goods: Economic Products: goods & services
that are useful, relatively scarce &
transferable
4 types of Goods:
Consumer
2. Capital
3. Durable (> 3 years)
4. Nondurable (< 3 years)
Service: work performed for someone else

11. **The Three Basic Questions:
What to produce?
2. How to produce it?
For whom is the product
being produced?

12. Product Partner Project! Improve or come up with a new product!
Name it
Draw the new product--at least half of paper and in color
Answer the three questions
what–be very descriptive and include the
type of good it is(capital, consumer, durable or non-durable)
how—how is the product going to be
made (factory, by hand, by you, by
hired workers)
for whom—who is your target consumer

13. Product Partner Project! Improve or come up with a new product!
4. List and label the four factors of production
(this should be the longest part of the project—
be detailed! List your names as the
Entrepreneurs)
5. What price would you sell it?
**product must be school appropriate!

14. Economic Products must have:
1. Value: worth expressed in dollars & cents
**Paradox of Value: some necessities
have little value whereas some
non-necessities have higher value
--think of it as the “diamond-
water” paradox
--Why?
Scarcity!

15. 2. Utility: capacity to be useful & provide satisfaction
--differs from one person to the next

16. Wealth: accumulation of those products that are tangible, scarce, useful and transferable
--service is not included in wealth (talent cannot be transferred)