The document discusses several economic concepts related to scarcity including unlimited wants and needs, choice, opportunity cost, and production possibility frontier. It explains that while scarcity is permanent, shortages can be temporary when supply does not meet demand. Due to limited resources, societies cannot satisfy all goods and wants so choices must be made about allocating resources.

1. SCARCITY, WANTS, & NEEDS Mr. Rey Belen

2. Economic Questions 1. What to produce? 2. How to produce? 3. For whom?

3. Basic Economic Concepts CIRCULAR FLOW OF ECONOMIC LIFE CHOICE TRADE OFF OPPORTUNITY COST PRODUCTION- POSSIBILITY FRONTIER SCARCITY UNLIMITED WANTS & NEEDS

4. Realities Scarcity, however, does not imply that the amount of resources or the state of technology is fixed. Scarcity limits the total output from the economy There are not enough resources in the world to satisfy the unlimited wants and needs of all people

5. CHOICE In a free market economy, CHOICE, is at the very heart of the system CONSUMER/HOUSEHOLD BUSINESS … must choose among a variety of goods and services, not of all which can be bought, given a limited budget, between spend ing now or saving for later; and between hours of work a nd hour of leisure … in deciding w hat to produce and how to pro duce it, must choose among the available resources – land , labor, capital, and ent repreneurship.

6. examples…

7. … remember COMPETITION will force each business to combine resources to achieve the highest profits GOVERNMENT must determine how to best utilize the nations resources determine how much resources should be channeled into collective goods and services in national defense choose a combination of monetary and fiscal policies to control unemployment and inflation. … because of SCARCITY, CHOICES are made; and this involves TRADE OFFS

8. Trade Off … it is a choice between alternatives uses for a given quantity of resources. … using one resources for one purpose means that the same resources can not be used for another purpose The allocation of 30% of the budget for defense means that were resources were drawn away from education, making the nation’s defense capability stronger at the expense of improved education. … in a country with a weak economy or a lower standard of living ,most trade off decision are not made by the government but by individual consumers and producers … usually consist of reallocating the factors of production used to produce the goods chosen by the consumer

9. Opportunity Cost it is the real economic cost of a good or service produced, measured by the value of the sacrificed alternative when you choose to go to college, you gain intellectual skills and an opportunity for a better job in the future … but, what is the cost of going to college? money spent on tuition fees, books, board and room. spend years LISTENING READING books to do this, you give up the opportunity of having a job during the time you spend in college.

10. Production-Possibility Frontier shows the various combination s of output the economy can produce given the available factors of production and technology that firms can use to turn such factors into output. points within the PPF shoe inefficient use of the available factors of production and technology because the economy is producing less than it could possibly do points beyond the PPF show unattainable combinations, because the economy does not have enough resources to achieve such an output combination points along the PPF show efficient use of the available factors of production and technology

11. The World of Scarcity “ You can’t always get what you want!” we live in a world of SCARCITY: society has limited resources, therefore it cannot produce all goods and services that people wish to have. wants always exceed the resources to satisfy them Efficiency calls for the effective use the limited resources to satisfy people’s wants “ when it cannot make anyone economically better off without making someone else worse off

12. Scarcity is Different from Shortage SCARCITY embodies the economic truism that economic resources are limited It is an economic phenomenon which is permanent in nature SHORTAGE temporary situation It occurs when the supply of goods and services runs low resulting from a greater demand on the part of the consumer.

13. Scarcity… scarcity exist in varying degrees: perhaps would have very little work to do in satisfying his needs if economic resources were no scarce… scarcity exists and there is no way of escaping from it, we have to understand the consequences that it brings shortage is no less than a temporary economic phenomenon which can be remedied by adjustment in the marketplace

14. The nature of Wants human wants in the broadest sense cover many areas beyond the reach of economic satisfaction… after one wants has been satisfied, others will surface because human wants are insatiable!

15. Unlimited Wants and Limited Income What are the things that you would like to have? as you think about this question more seriously, you will discover that the list is almost endless… it is natural for you to want something more than you have if you do not want something more than you have, you are probably dead

16. Limited Resources scarcity of resources is the main reason why we cannot have everything we want Source: National Geographic, October 1998 these must be apportioned in such a way that they will provide the greatest satisfaction to those who need them How are you helping make decisions in the allocation of goods and services in simply being a consumer, give the fact that we have limited resources and man have unlimited wants?

17. Prioritizing Wants “ FREEDOM OF CHOICE” you have the freedom to decide what you would like to do with your money you are free to determine the amount of money you will spend and the amount of money you want to put in a bank you have the freedom to choose the school where you would like to study freedom to choose the course you would like to take in college *all these are related to the income you and your parents have

18. Difference Between Wants and Needs WANTS refers to all things that people consume if their income were unlimited every has unlimited wants which cannot be wholly satisfied because of limited resources NEEDS undefinable from the standpoint of an economist however, the term need is used very casually in most conversation what people meant, usually, is that they want something they don’t have. Reality in the world of scarcity : Every want that ends up being satisfied causes one or more wants to remain unsatisfied

19. The Nature Of Needs MASLOW’S HIERARCHY OF NEEDS he based his theory on the study of outstanding person (self-actualized)