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  1. 1. It’s all about resources and wants! SCARCITY
  2. 2. The Problem Limited ResourcesInsufficient to Fulfill our Wants
  3. 3. The GoalIncrease Individual and Societal Welfare
  4. 4. WelfareSubjective Evaluation of Individual and Societal Well Being “How YOU doin’?”
  5. 5. Individual Goals: What We Want• Health• Friends and Family• Career• Peace• Love• Stuff03/13/13 Lesson 1: Scarcity 5
  6. 6. Social Goals: What We Want1. More and better education2. A cleaner environment3. More and better health care4. Greater public safety5. Less stress6. Preservation of non-renewable resources including natural resources7. Elimination of poverty03/13/13 Lesson 1: Scarcity 6
  7. 7. The Question Given limited resources,how do we best use them tomaximize people’s welfare?
  8. 8. RESOURCES: HUMAN CAPITAL Knowledge and skills of the workforce Your job in school is to develop your human capital.03/13/13 Lesson 1: Scarcity 8
  9. 9. Human Capital03/13/13 Lesson 1: Scarcity 9
  10. 10. Your Incredible hunka hunka human capital. the most important resource we have.03/13/13 Lesson 1: Scarcity 10
  11. 11. RESOURCES : PHYSICAL CAPITAL Goods produced for the purpose of producing something else03/13/13 Lesson 1: Scarcity 11
  12. 12. Land – Natural Resources03/13/13 Lesson 1: Scarcity 12
  13. 13. Entrepreneurship Combines other resources, takes a risk, seeks a profit Famous Amos03/13/13 Lesson 1: Scarcity 13
  14. 14. Money is not a resource03/13/13 Lesson 1: Scarcity 14
  15. 15. Money is not a resource03/13/13 Lesson 1: Scarcity 15
  16. 16. Time is not a resource03/13/13 Lesson 1: Scarcity 16
  17. 17. Time is not a resource03/13/13 Lesson 1: Scarcity 17
  18. 18. Time is not a resource03/13/13 Lesson 1: Scarcity 18
  19. 19. RESOURCES Resources are: [+] Human Capital [+] Entrepreneurship [+] Physical Capital [+] Land Resources are: [-] Not Money [-] Not Time03/13/13 Lesson 1: Scarcity 19
  20. 20. A nation’s wealth is determined by thequantity and quality of its physical and human resources and the political and social infrastructure.
  21. 21. SCARCITYYOU CAN’T HAVE EVERYTHING YOU WANT!The inability of limited resourcesto satisfy people’s wants03/13/13 Lesson 1: Scarcity 21
  22. 22. Scarcity It’s about RESOURCES and WANTS.
  23. 23. Which people face scarcity?a. Poorb. Richc. Selfishd. Selfless03/13/13 Lesson 1: Scarcity 23
  24. 24. Scarcity is pervasive• Rich Athlete• Donald Trump• Joe Schmoe• Dr. Charkins• The President• Your parents03/13/13 Lesson 1: Scarcity 24
  25. 25. You can’t eliminate scarcity
  26. 26. But you can learn to deal with it!
  27. 27. The test of scarcity• It has to be allocated.• It has a positive price.• It has an alternative use.• People who want it have to give something up to obtain it.• A choice has to be made03/13/13 Lesson 1: Scarcity 27
  28. 28. Some things that are scarce• Pencils • Paper clips• Yachts • Automobiles• Steaks • Teachers• Movies • Shoes• Economists • Compact Disks• Dentists • Computers• Refuse collectors • Computer programmers03/13/13 Lesson 1: Scarcity 28
  29. 29. Some things that are not scarce• Air • Used gum• Snow in some • Pine cones in parts of the Wrightwood country • Sand at the beach • Cowrie shells in• Garbage Mombassa• Pollution • Drunk drivers• Dirt03/13/13 Lesson 1: Scarcity 29
  30. 30. Scarcity is the Villain!!!!!!03/13/13 Lesson 1: Scarcity 30
  31. 31. Why do .......• some very good • colleges turn students get students away? mediocre grades? • colleges have large• hospitals turn classes? pregnant women • colleges offer so away? few courses? • some parents• servers give less spend little time than perfect with their children? service?03/13/13 Lesson 1: Scarcity 31
  32. 32. Why don’t.......• we provide organ transplants for all • you study 24 hours who want them? a day?• we prevent death • you spend 24 from dirty air? hours a day with• we educate all your loved one(s)? young children in • you sleep more? their native language?03/13/13 Lesson 1: Scarcity 32
  33. 33. Who is the villain when:• You don’t get the service you want at a restaurant?• You don’t get the service you want from the registrar?• You are put on hold by the secretary?• You don’t get tickets to the concert?03/13/13 Lesson 1: Scarcity 33
  34. 34. 03/13/13 Lesson 1: Scarcity 34
  35. 35. Your reaction to scarcity• Yell, scream, whine, moan, whimper• Accept scarcity and see if there is anything you can do to remedy or improve the situation03/13/13 Lesson 1: Scarcity 35
  36. 36. When choices have to be made,scarcity is the villain, not the decision-maker.
  37. 37. Attempts to avoid or ignore scarcity don’t work.• I’ll put it on the credit card.• I’ll get up early to study.• Let’s get an apartment.• I need a new car; I can get a loan.• Let’s go to Vegas.03/13/13 Lesson 1: Scarcity 37
  38. 38. Scarcity: The Problem Restated The inability of limited resources to fulfill society’s wants.
  39. 39. Scarcity is not:• Poverty – all poor face scarcity – all who face scarcity are not poor• Rareness – a rare tropical disease• Doesn’t address needs – wants, not needs03/13/13 Lesson 1: Scarcity 39
  40. 40. The Goal of Economic Analysis• Greater “wealth” for individuals and society• Wealth is the subjective evaluation by individuals of their well being.03/13/13 Lesson 1: Scarcity 40
  41. 41. The Question Given limited resources,how do we best use them tomaximize people’s welfare?
  42. 42. Main Points• Resources are limited• Land, human capital, physical capital, and entrepreneurship are resources; time and money are not.• Scarcity is the inability of our limited resources to satisfy our wants.• Wealth is the subjective evaluation of well being.• The goal of economic analysis is to increase individual and societal wealth.03/13/13 Lesson 1: Scarcity 42