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Scarcity: The Basic Economic Problem
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Scarcity:
Economics:
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People have wants We want stuff, lots of it and ever changing
Scarcity affects everyone Even the richest have to deal with scarcity
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Fast food
Gasoline
Medicine
Disease
Water
Garbage
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Fast food
yes
Gasoline
yes
Medicine
yes
Disease
no
Water
Maybe?
Garbage
no
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Something is scarce if ANYONE would be willing to pay to have more of it.
OR
Everyone doesn’t have as much as they want for free.
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Goods: physical objects that can be purchased Give 5 examples of goods
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Services Work that one does for another for payment
Give 5 services
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Producer: (Seller)
Consumer: (Buyer)
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What will be produced???
Consider natural resources
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How will it be produced??? Machinery, manpower, technology
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For whom will it be produced??? All get equal share?
How much you’re willing to pay?
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FOP: Resources needed to produce goods and services
Economists use resources and factors interchangeably
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1. Land [natural resources] A. In the earth - coal, oil, water, fossil fuels, etc. B. On the earth – vegetation and water C. In the atmosphere – sun, wind, and rain
“Gifts of Nature”
Water Wind
Sun Fossil fuels
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2. Labor
anyone who works [“paid work”] A. Physical – pro athletes & lumberjacks B. Intellectual – ministers, doctors & lawyers
*Most important resource
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Capital Goods
[tools, machinery, & factories]
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Entrepreneurship: risk taker to start business, put other FOPs together
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Think of something you recently purchased. Write a paragraph that explains how the factors of production were used to create it.
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Utility: an economist’s way of saying usefulness, or satisfaction received from a good or service