Unit 1 Lesson 2 Scarcity and Abundance (Chapter 1 section 1)

1. Unit 1 Lesson 2Scarcity and Abundance(Chapter 1 section 1)

2. Objectives • Identify two definitions of the term scarcity. • Select examples consistent with the two definitions. • Identify conditions that might cause people to treat scarce resources as if they were not scarce.

3. Video • https://www.youtube.com/watch?v=yoVc_S_gd_0&list=PL7RvVVj_yXW7w_6HrvXQZJzSce6prjMnD&index=2 • https://www.youtube.com/watch?v=Np-dZSdzymk&list=PL7RvVVj_yXW7w_6HrvXQZJzSce6prjMnD

4. Economics Economists insist that scarcity exists and forces people to make choices about the use of resources. But people in the United States and elsewhere see many signs of abundance around them in their day to day lives. They also see that certain important resources like water and food are wasted regularly. How Important can the concept of scarcity be, given wide­spread evidence of abundance and waste? • Economists do not see a paradox here. Abundance and scarcity can exist together. People may treat scarce goods as abundant if they receive misleading signals about the scarcity problem. Scarcity exists when resources are limited and people's wants are unlimited. Usually people's wants for consumer goods, leisure time, and environmental quality exceed the time and resources needed to produce these goods and services. Economists describe this condition as one of scarcity because it forces people to choose how they will use the resources in question. For every good and service produced, a decision must be made not to produce a different good and service.

5. Reasoning In economic reasoning, scarcity is a relative concept, not an absolute one. Many people think it means "not plentiful," but in economics something is scarce when it has more than one valuable use. For example, it is obvious to a thirsty person that water is scarce (not plentiful) in the desert. But water that seems plentiful in a large lake or river is scarce nonetheless because it has many mutually exclusive uses — including, for example, crop irrigation, the production of electricity, a venue for shipping lanes, fish habitat, and many forms of recreation Water, like many resources, can be abundant and scarce at the same time.

6. Concepts • Alternatives • Choice • Scarcity

7. Terms • Wants • desires that can be satisfied by consuming a good or service • Needs • things such as food, clothing, and shelter that are necessary for survival • Scarcity • a situation that exists when there are not enough resources to meet human wants • Economics • the study of how individuals and societies satisfy their unlimited wants with limited resources ( • Goods • physical objects, such as food, clothing, and furniture, that can be purchased • Service • work that one person does for another for payment • Consumer • a person who buys goods or services for personal use

8. Terms continued • Producer • a person who makes goods or provides services • Factors of production • the economic resources needed to produce goods and services • Land • all the natural resources on or under the ground that are used to produce goods and services • Labor • all the human time, effort, and talent used to produce goods and services • Capital • all the resources people make and use to produce and distribute goods and services • Entrepreneurship • the combination of vision, skill, ingenuity, and willingness to take risks that is needed to create and run new businesses

9. Lesson Description • The lesson provides students with two definitions of the term scarcity. They apply these definitions to several examples of human behavior. • In the second part of the lesson students use the definitions to explain why people may treat scarce resources as if they were not scarce.

10. What do you think the term scarcity means? • Example: scarcity means not enough of something, or a condition in which something is not plentiful. • Example: one car and eight people who wish to ride, or five bagels and nine hungry people to eat them.

11. Scarcity Definition • A situation in Which human wants are greater than the capacity of available resources to provide for those wants. • (Definition 1 involves a relative relationship in which scarcity depends on how much of something is available relative to how much is wanted. Usually students use an absolute relationship in their definitions: If a small amount of something is available, that something is scarce. • Definition 2 emphasizes a second aspect of the concept: the importance of more than one valuable use. Goods are scarce if choosing one valuable use of them means giving up another valuable use.) Refer the students to Activity 1 and ask them to read it. Ask the students to work in pairs to decide which examples do and do not illustrate the concept of scarcity.

12. Activity 1 • read it. • work in pairs to decide which examples do and do not illustrate the concept of scarcity.

13. Activity 1 • A. Old economics textbooks collected in a bookcase near the teachers desk with a sign that says "Free books, take as many as you want. The books have been there for three years. • (Not scarce. No alternative valuable use.) • B Old economics textbooks collected in a bookcase ' near the teacher's desk with a sign that says "Free books, take as many as you want. Another sign posted in the hallway says "$10 paid for any recycled textbook. Bring books to the Principal's office.” • (Scarce. The books may be read or they may be recycled. Two valuable uses.)

14. C. One economics textbook, five students who wish to do well in the economics course, and an important test in class the next day. • (Scarce. The one book could be used by five different people; it has valuable alternative uses.) • D. One economics textbook, five students who are not taking economics, and an important test in the economics class the next day. • (Not scarce. Same number relationship, but the information in the book is not valuable to the five students.)

15. E. Petroleum in Japan, a country without its own oil fields and without oil reserves. • (Scarce. Petroleum has many valuable uses in Japan.) • F. Petroleum in Saudi Arabia, a country with many oil fields and oil reserves. • (Scarce. Petroleum has many valuable uses in Saudi Arabia, and it can be sold to other people in other countries. Several valuable uses.)

16. Describe situations where scarce resources are treated as if they were not scarce because the people involved don't personally find the resources to be scarce. Behavior in these cases often leads to waste and poor use of the resources.

17. Examples • Teachers assign unnecessary homework to their classes, not recognizing that the students have many assignments from many classes. The teachers do not bear the cost of the assignment overload (how to spend scarce study time?), so they may neglect to take scarcity into account when they assign students their homework. • Land used as a site for new school buildings was once prime wildlife habitat. The people designing the school had no interest in wildlife so to them there was no cost in using the land for construction of a school

18. Activity 2 • read it • Work in pairs to decide which examples show people treating scarce resources as not scarce and which examples show people treating scarce resources as scarce.

19. Activity 2 • A. Water fountains in Rome flow continuously ,
with water carried by viaducts from the Italian mountains. People walking in Rome quench their thirst by drinking from these fountains. But most of the water flows into the streets and down the drains to a river that passes through the city. • (Scarce resource treated as not scarce The water 
has other valuable uses, such as irrigation or sewertreatment.)

20. B. At closing time, restaurants in the United s
are required to throw away all uneaten food. To
meet health standards for food preparation and the safety of consumers, the food cannot be stored for use the next day. Also, the law prohibits restaurant employees from giving the food to the poor or dispersing it to local food banks. • (Scarce resource treated as not scarce. The food could feed hungry people; it could be stored for future consumption; or it could be used as compost to improvesoil conditions in gardens.)

21. C. Oxygen is taken from the air and stored in containers. When divers wish to stay underwater for long periods of time, they purchase container-stored oxygen and breathe from it during their underwater activities. • (A difficult example. Oxygen in the air around us is not scarce. People routinely acquire it at no cost. There is more of it than individuals can use. But oxygen underwater is scarce, as are the resources needed to capture oxygen and store it in container* for underwater use. So container-stored oxygen* scarce.)

22. D. Pebbles are taken from a beach to build a walk way in a homeowner's lawn. No one else wants the pebbles. The pebbles are not necessary the lake's ecosystem or animal habitat. • (Not Scare. The pebbles have no valuable alternative use. The resources necessary to ,over the pebbles [time and effort, for example] are scarce. They could be used for other valuable purposes.)

23. E. A farmer has a water irrigation contract that requires the water user to use the entire allocation of water to water crops, whether or not all! the water is needed for crop irrigation. If the f farmer does not use all the water, he or she will receive a smaller allocation next year. • (Scarce resource treated as not scarce. The farmer is prohibited from considering other valuable uses for the water.)

24. CLOSURE • review the key ideas in this lesson explaining why there is a lot of wasted food in traditional school cafeterias. • (Food is scarce, according to both definitions Students, however cannot store it or resell it. Often they do not pay for it. For the students, therefore, food in the school cafeteria has only one valuable use - eat it or throw it away. This helps to explain why some of the food is treated as not scarce.)

25. Multiple choice 1. Which of the following statements is not consistent with the concept of scarcity? • People are scarce because they have many valuable uses in the world. • Trashis scarce because you rarely see much of it around unless you go to a landfill. • Knowledge is scarce because what we wish to know is so great relative to what we do know atthis time. • Electricity is scarce because it has many valuable uses. • Which of the following resources was considered scarce in 1000 AD? • Petroleum • Aluminum • Computers • None of the above 3. Which of the following people must deal with scarcity when they make decisions during the day. • The richest person in the world • A homeless person living in New York City • A commuter living in the suburbs and working in the city. • All of these people must deal with scarcity

26. Essay Question • Do students face scarcity? Define scarcity and provide two examples showing how students are confronted with scarcity if a teacher assigns them homework. • (Answer: Scarcity is a circumstance in which human wants exceed the capacity of available resources to provide for those wants. It is also a situation in which a resource has more than one valuable use. Students are resources. They may want to use their time for work, leisure, fun, relaxation, and gaining knowledge. A homework assignment requires students to make a decision: whether to give up other valuable uses of their time and energy to do homework or to ignore the home work, do other valuable things instead, and bear the consequences of not doing as well in the class.)

27. Homework • Chapter 1 section 1 • Pages 4-11 • 2-5

28. 2. What is the difference between needs and wants? Explain how a need may also be a want. • Wants are desire that can be satisfied by consuming a good or service; needs are necessary for survival. Food is a need, but you make choices about the food you eat. • 3. How does scarcity affect consumer? Producers? • Consumers: forces choices on what they are able to buy with their limited resources. • Producers: influences which factors of production to use and in what amounts. • 4. What services that individuals or businesses provide do you use very day? • Answers will vary, but might include items from grocery store, services of teachers, public transportation, and so on. • 5. Describe how the owners of a computer repair store might use the four factors of production to run their business. • Land: store occupies land; natural resources used to build stores and products. • Labor: managers, sales people. delivery drivers, technicians. • Capital: store, warehouses, delivery trucks. • Entrepreneurship: Ideas, energy, and effort that make the store a success.