A lecture about economics

2. Scarcity
SSEF1 The student will explain why limited
productive resources and unlimited wants result in
scarcity, opportunity costs, and tradeoffs for
individuals, businesses, and governments.
a. Define scarcity as a basic condition that exists when
unlimited wants exceed limited productive resources.
b. Define and give examples of productive resources (e.g.,
land (natural), labor (human), capital (capital goods),
entrepreneurship).
c. List a variety of strategies for allocating scarce
resources.
d. Define opportunity cost as the next best alternative
given up when individuals, businesses, and
governments confront scarcity by making choices.

3. What is scarcity?

4. Scarcity is a condition that exists when infinite, or unlimited, wants exceed
limited, or finite, resources

5. Scarcity

6. Scarcity
• Doesn’t always mean a shortage. It means that resources are
always finite and wants are generally infinite.
• Individuals, businesses and governments have to deal with
scarcity.

7. What are productive resources?
• Productive resources are anything that can be used do create
goods or services
• Consider this item. What are some of the resources required
to create this shirt?

8. 4 types of Productive Resources
• Natural resources, human resources, capital
resources, and entrepreneurship
• These are often referred to as “Land, Labor,
and Capital, and Ownership”
• All productive resources (also called
“economic resources”) will fall under one of
these four categories

9. Natural Resources
• All land and raw materials used for
production.
• What are some examples of natural resources
or raw materials?
• What natural resources are required for the
production and distribution of the shirt we
saw earlier?

10. Human Resources
• Also known as “labor”
• Can include physical labor or mental labor
• Farmers, Factory workers, Computer
Programmers, Management
• Any people whose efforts are required to
create a good or service
• What human resources might we need to
produce and sell our shirt?

11. Capital Resources
• Any resource made by humans used to create
a good or service
• Can include factories, money, machinery,
vehicles, technology
• What capital resources were needed to
produce our shirt?

12. Entrepreneurship
• Also called “ownership”
• The leadership that organizes land, labor and
capital
• In a capitalist society this is done by private
individuals with their own money in a free
market
• In command economies government provides
entrepreneurship.

13. Allocation of resources
• Economics answers three questions:
• 1) What will be produced?
• 2) How much will be produced?
• 3) For whom will it be produced?
• Consider the example of our T-shirt. What are some ways we
might choose to distribute our shirts?

14. Tradeoffs/Opportunity costs
• Every economic transaction involves a trade-off. A trade-off
simply means that we give up one thing to have another. We
can’t afford everything. If we spend 10 dollars on a shirt, that
10 dollars could have instead been spent on a CD, 3 pair of
socks, a case of cola, or could have been saved and put
towards a more expensive item.
• Trade offs are expressed in economics in terms of
“opportunity costs”. This is usually represented in terms of the
cost of the most valuable thing one could have gotten instead
of the chosen good or service.

15. Opportunity costs
• Have you ever made a trade-off?
• What are some of the trade-offs made by
businesses?
• What are some trade-offs faced by
government?