Economic Decision Making and Scarcity

​Economics Topic 1

Lesson 1

​Scarcity

​Essential Question

​How Does Economics Affect Everyone?

​1.1 Scarcity

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Students will be able to :

• Explain why scarcity and choice are the basis of economics in every society.

• Summarize how entrepreneurs fuel economic growth.

• Describe the 3 Economic Factors of Production and the differences between physical and human capital.

• Explain how scarcity affects the factors of production.

​Scarcity Means Making Choices

​You have so may different ways you can spend you money. You also want to upgrade to the newest smartphone model. At the same time, you need to pay you car insurance. With limited funds, you can't have it all. How will you choose?

​Scarcity Means Making Choices

• Unlimited Wants, Limited Resources

• Scarcity Does Not Mean Shortage

​Unlimited Wants...

Limited Rescources

​A need is something essential for survival. A want is something that we desire, but is not necessary for survival.

People satisfy their needs and wants with goods and services. Goods are physical objects that someone produces. Services are actions or activities that one person performs for another.

Open Ended

According to the map, Germany faces a scarcity of what resource? Why do think their scarcity exists?

Multiple Choice

What is the term used to describe a temporary low supply of a good or service?

• need

• scarcity

• want

• shortage

​Entrepreneurs Use Factors of Production

​How are scarce resources turned into goods and services? Entrepreneurs play a key role. Entrepreneurs are people who decide how to combine resources to create new goods and services. Anyone who opens a business (large or small), is an entrepreneur.

To make a profit, entrepreneurs are willing to take risks. They develop new ideas, start businesses and, if they are successful, even create new industries. By producing new goods and services and hiring workers, they fuel economic growth.

​Entrepreneurs use Factors of Production

• Land

• Labor

• Capital (Physical & Human)

​Factors of Production

​The resources to make all goods and services.

​Human Capital

Physical

Capi

tal

Multiple Choice

Someone taking a course in Web Design is affecting what factor of production?

• Entrepreneurship

• Physical Capital

• Land

• Human Capital

​All Resources are Scarce

​All goods and services are scarce because the resources used to produce them are scarce. Consider a fresh sandwich made at a local deli. The sandwich roll might have started as wheat in a field in Kansas and then been milled into flour and later baked in an oven. The cheese might have been made for milk from Wisconsin cows, and the ham may been produced from pigs from a farm in Arkansas. The lettuce and tomatoes may have been grown in California. All of these ingredients may have been shipped to the deli here in Stuart, where it was prepared for you at lunch with some friends.

​All Resources are Scarce

​Even though there may be an abundance of sandwich ingredients the day you and your friends sit down for lunch, scarcity still exists and that sandwich shop. The land, labor and capital resources used to produce the ingredients are all scarce.

Multiple Choice

Which of these would be an alternative use for farmland?

• an amusement park

• farm machinery

• skilled labor

• cash

Open Ended

Essential Question

How does economics affect everyone?