1. Day 2 – The Problem of Scarcity
Unit 1
Economic Basics and systems
Day 2 – The Problem of Scarcity

2. Objectives Terms: Scarcity Allocate Opportunity Cost Natural Resources
Define scarcity and discuss how it influences economic decisions
Scarcity
Allocate
Opportunity Cost
Natural Resources
Identify examples of Capital and Natural Resources
Capital Resources
Wants
Understand the difference between wants and needs
Needs
Substitute

3. Remind me… What is Economics? What does that mean, to “consume”?
Ok… so it’s kind of all about Producers and Consumers…
What does that mean, to “consume”?
What ARE Resources anyway?
Finally, what are the Big Three Questions of Economics?
Which questions do you KNOW the answer to?

4. Moving On…
How does popcorn relate to scarcity?

5. Scarcity – Because Resources are limited
The FUNDAMENTAL Economic Problem of unlimited human wants in a world of limited resources
In other words…
It is IMPOSSIBLE to meet everyone’s wants and needs!
Even though Johnny’s Dairy tries to at lunchtime…
Because of this, CHOICES must be made
i.e. Would I rather have a PS4, or a Baby Panther…
Money, after all, or “Capital” I$ a Re$ource…
What is Scarcity?

6. Who’s fish is it?

7. Scarcity – Decisions, Decisions
When we choose how to use our Resources, we allocate them
To set apart resources for a particular purpose
Does not matter whether or not they are used for that purpose!
For economic intent, they are already “consumed”
And, in fact, when people DON’T follow through on this, they can get into trouble… even jail…
The decision to use a resource a particular way is opportunity cost
What we give up to gain (or hopefully gain) something else
What is the opportunity cost of a coke?

8. Opportunity Cost (it doesn’t knock)
How much does a 20 oz. Cherry Coke cost?
WRONG!
It “costs” whatever else you could use that money for
The “cost” of making a paper airplane is whatever else you could have made with the paper, not the .01 cent.
Where this gets really confusing is things like gambling, or our “time”
Which I still say is not a traditional resource 
Think of extra-curriculars… to choose one to go to is to lose another 

9. “Types” of Resources Natural Resources Capital Resources
Raw Materials that occur in Nature
Lumber, Coal, Land, Water
Capital Resources
Tools, machines, and factories used to produce goods
Man-Made
i.e. Goods used to make other goods
Give an example of a Natural Resource:
Give an example of a Capital Resource?

10. “Types” of Resources What about people? Are they Natural or Capital?
Some don’t seem very natural…
We put people into a separate category “Human Resources” which we will focus on later…

11. How awesome is this picture?

12. So how do we make choices…
One of the other big economic concepts uses words we are very familiar with… wants and needs
Needs
Something you have to have. You can’t live, or function, without
Food, water, shelter in most cases…
Wants
Something you would like to have
Is not absolutely necessary
An xbox, a certain type of food, etc.
What’s the difference between wants and needs?

13. What did the video show?

14. Wants VS. Needs Keep in mind it isn’t always about survival
In a business, for example, there are wants and needs
For a pie company, sugar might be a need, while for your 6 year old sister, it is a want
And the problem with both wants and needs can go back to the fundamental problem of economics…
What was it again?

15. Scarcity VS Wants AND Needs
Due to Scarcity, in dealing with wants and needs people make choices, but also seek out substitutes
Different goods that at least partially satisfy a want or need
There are sugar substitutes, “faux leather”, but also different building materials, and vitamins for food

17. Objectives Terms: Scarcity Allocate Opportunity Cost Natural Resources
Define scarcity and discuss how it influences economic decisions
Scarcity
Allocate
Opportunity Cost
Natural Resources
Identify examples of Capital and Natural Resources
Capital Resources
Wants
Understand the difference between wants and needs
Needs
Substitute