Scarcity
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The Key Economic Concept PowerPoint PPT Presentation


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SCARCITY. The Key Economic Concept. True or False *The best things in life are free *The largest cost of college is the amount you pay to the college for tuition and fees * Anything worth doing is worth doing well *Life should be sustained at all costs. SCarcity.

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The Key Economic Concept

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Scarcity

SCARCITY

The Key Economic Concept


Scarcity1

True or False

*The best things in life are free

*The largest cost of college is the amount you pay to the college for tuition and fees

* Anything worth doing is worth doing well

*Life should be sustained at all costs

SCarcity


Scarcity2

Scarcity is an insufficient supply of something where “insufficient” means not enough to satisfy the desires of a group of people.

Scarcity implies that decision makers face trade-offs, that is they must give up something to get something else.

SCARCITY


Scarcity3

Every choice entails an Opportunity Cost.

The Opportunity Cost of a decision is the decision maker’s next best alternative

SCARCITY


Scarcity4

Scarcity is a fundamental fact of life

Everyone experiences scarcity

Scarcity makes it necessary for people to make choices among scarce goods and services (resources)

Because we must choose, we constantly bear the opportunity costs of our choices

To make good choices, we must carefully consider the opportunity costs we face.

SCARCITY


Opportunity cost

  • Rank the following snacks according to your taste

    • Ritz Peanut Butter Cracker

    • Chips Ahoy Cookies

    • Oreo Cookies

    • Nutter Butter Cookies

  • Suppose I let you choose one snack.

  • What OPPORTUNITY COST does your choice involve?

  • OPPORTUNITY COST


    Opportunity cost1

    How is “Trade-Off” different from “Opportunity Cost”?

    Give an example of how you could use opportunity cost to improve a personal decision.

    OPPORTUNITY COST


    Opportunity cost2

    Imagine you are invited to a party Tuesday night…

    What is your opportunity cost for attending the party?

    Is the opportunity cost the same for everyone?

    Why? Or why not?

    OPPORTUNITY COST


    Opportunity cost3

    Raleigh has built a new convention center and paid for it by raising the hotel tax.

    One local politician argued that the project was free for Raleigh citizens since it was paid for by out-of-town visitors.

    How would you use Opportunity Cost to respond to this politician?

    OPPORTUNITY COST


    Opportunity cost4

    Which explains why the convention center project has not been free for Raleigh citizens?

    A. the tax increase likely caused a reduction in visits to Raleigh

    B. Cost overruns are common in public projects

    C. The marginal benefit of the project exceeded the marginal cost

    D. The tax funds could have been used for other projects

    OPPORTUNITY COST


    Opportunity cost5

    The Economics

    Of

    Life and Death

    OPPORTUNITY COST


    Opportunity cost6

    You are at a party and you overhear an acquaintance say:

    “It shows a lack of moral character to introduce economics into consideration of the value of life. Human life cannot be priced. Who is to say what the value of a life is? We have an obligation to preserve life and we must do whatever it takes to give even the poorest child access to state of the art medical care.”

    OPPORTUNITY COST


    Opportunity cost7

    Use the concepts we have discussed today to join the conversation.

    OPPORTUNITY COST


    Opportunity cost8

    HOMEWORK

    Find a news article that deals with scarce resources,

    Use the opportunity cost and cost-benefit principles to analyze the article

    Write a 350-450 word analysis of the article – not a summary of the article

    Bring your article and analysis to next class

    OPPORTUNITY COST


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