A basic intro to economics and scarcity and decision making

1. Introduction to
Economics

2. • So what is Economics?
–Economics: The study of the choices
that people make in a world of scarcity
Economics…

3. Wants & Resources
• Wants: Things that people desire to have
• Resources: Anything used to produce goods and
services (or our “wants.”)
– There are 3 types of economic resources...
• Unfortunately, resources are limited… :(

4. Scarcity
• Scarcity: When our “wants” are greater than
the resources available to satisfy them.
• As long as human wants exceed available
resources, scarcity will exist.
– (…and wants will always exceed resources.)
Wants > Resources = Scarcity

5. Choices
• Because of scarcity, we have to choose which
wants we will satisfy.
– In other words: Scarcity leads to choices.
• You can’t always get what you want…
Scarcity → Choices

6. What Do you See in The Picture?
How does it relate to Scarcity and Choice?

7. Recent Choice You Made Thing you couldn't do because of your choice
Watched a movie instead of
doing laundry.
I couldn’t wear my favorite socks (they stink).

8. Opportunity Cost
• When you choose something, you lose something.
• Opportunity Cost: Whatever you have to give up
when a choice is made.
Choices → Opportunity Cost
– Our choices cause us to have an opportunity cost.
• Examples:
– Buy a pair of shoes or take your GF to dinner.
– Go to a concert or go to work.
– Take a road trip or save for college.
– Study for a test or surf facebook.

9. What could be some “Opportunity Costs” of using Social Media?

10. So what is scarce?
• Unfortunately, many things that we use/need
on a daily basis are scarce.
• The two big ones are:
• Money: We use money to buy goods and services,
but money does not produce goods and services, so
it is not one of the three economic resources.
• Time: Time is necessary for production, we all wish
we had more time, but it does not produce goods
and services, so it is not one of the three economic
resources.
...we will talk about more later!

11. Connect the dots…
Wants >
Resources
Scarcity
Scarcity Choices
Choices
Opportunity
Cost

12. The Economic Resources
(a.k.a. - Factors of Production)

13. Economic Resources
Resources: Anything used to produce goods &
services to be consumed (bought by consumers)
In economics, we call these
“The Factors of Production”
(Land, Labor & Capital)

14. Land
• Land: All the natural resources found in
nature that are used in production.
– Ex: Water, oil, minerals, animals, forests, etc.

15. Labor
• Labor: Both the physical and mental effort of
people in the production of goods and services.
– Ex: Workers on a factory line; accountants at a
business; teachers at a school; etc.

16. Capital
• Capital: Any human-made resource used to
produce goods and services.
-Ex: Office buildings, trucks, cash,
computers, machines, factories, MONEY!

17. To Review...
1. A resource is anything used to produce
goods and services to be consumed.
2. Resources are also known as “The Factors
of Production” in economics.
• Land: All the natural resources found on earth
that are used in production.
• Labor: A person’s physical and mental effort in
the production of goods & services.
• Capital: Any human-made resource that is used
to produce other goods and services (Ex: tools,
machines, etc.)

18. On this Six Flags Map…
Where are examples of Land resources?

19. On this Six Flags Map…
Where are examples of Labor resources?

20. On this Six Flags Map…
Where are examples of Capital resources?

21. The Three Economic Questions
What, How, Who?

22. The “Three Economic Questions”
• Remember, Economics is the science of
choosing what to do with scarce resources.
• To wisely choose how to use Land, Labor,
Capital, & Time, three big questions must be
considered.
– Focused on ensuring that nothing is wasted.

23. Three Economic Questions Every
Society Must Answer
The three questions…
1. What will be produced?
2. How will it be produced?
3. Who is it produced for?

24. Answering the Questions
• Economies are defined by:
– WHO answers the three questions.
• …individuals?
• …government?
• …young?
• …old?
• …etc.
– HOW the questions are answered.
• …military goods or civilian goods?
• …robots or human laborers?
• …the privileged elite or the middle class family?

25. Predict…
• We’re going to look at the world’s two major
economic systems and what sets them apart.
• Can you already predict what they are?

26. Socialism Vs Capitalism

32. Now take a moment and create a 3 Slide
slideshow and see if you can find three
separate pictures that relate to the 3
Economic Questions and explain them to
your partner….please be creative.
The three questions…
1. What will be produced?
2. How will it be produced?
3. Who is it produced for?