ECONOMICS • What is Economics to you? • Money? • Buying? • ? • DEFINE ECONOMICS – What is economics and what does it mean?
ECONOMICS • ECONOMICS • The science that studies the CHOICES people make as they try to satisfy their wants in a world of SCARCITY. • Economics (believe it or not) has a direct relation on many choices in our country – even the choice to be the ???????? .
ECONOMICS • THE MOST OVERWEIGHT COUNTRY IN WORLD!!
ECONOMICS • Guide to Economic Reasoning: • People CHOOSE • People’s choices involve COSTS • People respond to INCENTIVES in predictable ways • People create economic systems that INFLUENCE individual choices and incentives • People gain when they TRADE VOLUNTARILY • People’s choices have CONSEQUENCES that lie in the FUTURE
SCARCITY • Economists insist that SCARCITY exists and forces people to make choices about the use of resources. • In economic reasoning scarcity DOES NOT ONLY mean “not plentiful,” but in economics something is also scarce when it has more than one valuable use. • HUH? WHAT??
SCARCITY • There are 2 definitions of SCARCITY: • 1. A situation in which human wants are greater than the capacity of available resources to provide for those wants. • Ex: Think Candy Bars • 2. A situation in which a resource has more than one valuable use. • Ex: Think Water – Water that seems plentiful in a large lake is scarce because it has many mutually exclusive uses – crop irrigation, trading, consumption and recreation.
SCARCITY ACTIVITY 1 ANSWERS: • Statement #1: • Not Scarce – No alternative use and it appears no one wants them. • Statement #2: • Scarce – The books may be read or they may be recycled. Two valuable uses. • Statement #3: • Scarce. The one book could be used by five different people; it has valuable alternative uses.
SCARCITY • Statement #4: • Not Scarce – Same number relationship, but the information in the book is not valuable to the five students. • Statement #5: • Scarce – Petroleum have many valuable uses in Japan. • Statement #6: • Scarce. Petroleum has many valuable uses in Saudi Arabia, and it can be sold to other people in other countries
ACTIVITY 2 ANSWERS: • Statement #1: • Scarce resource treated as not scarce. The water has other valuable uses, such as irrigation or sewer treatment. • Statement #2: • Scarce resources treated as not scarce. The food could feed hungry people; stored for later consumption; etc.. • Statement #3: • Tough One – Oxygen in the air around us is not scarce, often more around than we need. But oxygen underwater is scarce as are the resources to capture it – so container stored oxygen is scarce.
SCARCITY • Statement #4: • Not scarce. The pebbles have no valuable alternative use. The resources necessary to move the pebbles (time and effort, for example) are scarce. They (time and effort) could be used for other valuable purposes. • Statement #5: • Scarce resource treated as not scarce. The farmer is prohibited from considering other valuable uses for the water.