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Scarcity-by Aaron GP

Scarcity-by Aaron GP. Scarcity-The basic concept in economics …. A resource is scarce when there is not enough available to satisfy the various ways a society wants to use it. Microeconomics is the study of individual decisions based on scarcity.

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Scarcity-by Aaron GP

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  1. Scarcity-by Aaron GP

  2. Scarcity-The basic concept in economics…. • A resource is scarce when there is not enough available to satisfy the various ways a society wants to use it. • Microeconomics is the study of individual decisions based on scarcity. • Because wants are unlimited but resources are finite, choice is an unavoidable issue in economics. • Scarcity of… -land -labor -capital (physical, or human) -entrepreneurship

  3. SCARCITY= WANTS >AVALIBILITY OF RESOURCES The PPC graph shows trade off of producing each product. Trade off- PPC shows choices due to opportunity cost (opportunity cost is the value of the next best choice, due to scarcity)

  4. Relating to other units • Economic goods are scarce goods Supply and demand. Firms need to know how much of a good to sell. This is because they have to consider scarcity of what they are selling. Ex: Diamonds are not actually rare, but because firms withdrawal supply they become scarce leading to greater demand. Comparative advantage-The ability to perform an activity at a lower opportunity cost. Opportunity cost is a direct effect of scarcity. If their resources were not scarce then countries would produce the maximum of every product, but instead because of limited quantities they must choose what to produce, and how much.

  5. Multiple choice 1. What economic concept is included in graph A, but not included in graph B? a. opportunity costb. constant costc. increasing costd. trade-offs 2. The curve on a Production-Possibilities graph represents a. the one best combination of outputsb. potential outputc. total wanted output of goods by consumersd. a level of output that cannot be achieved

  6. Continued with answers 3. Production-Possibilities graphs are used a. only in international economicsb. only in microeconomicsc. only in macroeconomicsd. in both macroeconomics and microeconomics KEY 1. c 2. b 3. d

  7. FRQ • Determine the opportunity costs of each farmer for both corn and wheat. Which farmer should specialize in corn? Which should specialize in wheat? Include your computations. • Suppose each farm had 90 acres, calculate the total amount of wheat each farm could produce if it produced only wheat. • Calculate the comparative advantage using the data. Include your computations.

  8. FRQ ANSWERS 1. 2. Reff, and Bru could both produce 15,000 bushels 3. Bru’s Farm has comparative advantage in corn Reff’s Farm has comparative advantage in wheat

  9. Real world examples • http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html • http://www.moneycontrol.com/news/features/will-water-scarcity-increase-tensions-across-asia_639021.html

  10. Movie clip/cartoons http://www.youtube.com/watch?v=1Nb3f5Ugzqk

  11. THE END

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