Scarcity and Decision Scarcity and Decision MakingMaking

Wants

Physical Wants – needs that are necessary to sustain life (e.g. food, clothing, shelter)

Psychological Wants – wants that are not essential to sustain life (e.g. gold jewelry)

SCARCITY Humans have unlimited wants but limited

resources. Therefore we must make choices. Opportunity Cost-what you give up when you

make a specific choice. (e.g. stay in school, the o.c. is a full time job)

For something to be scarce, demand for it must exist.

*Is salt water scarce in Saskatchewan? (in economic terms?)

MASLOW’S HIERARCHY of Needs

NAUGHTY!

Resources & Goods / Services

Human Resources – labour needed to produce goods and services (e.g. teacher) LABOUR

Capital Resources – non-human processed resources used to produce goods and services CAPITAL (FACTORIES, MACHINES)

Natural Resources – land and all unprocessed non-human resources used to produce goods and services LAND

Goods – concrete visible things that satisfy human wants and that last a period of time Services – invisible things that cannot touched or seen (e.g. concert)

ScarcityDecision MakingOpportunity Cost

Human Wants > Resources = Scarcity Decision Making – can’t have everything

because of scarcity Opportunity Cost – the decisions will mean

we have to give up something to gain something else (e.g. Colin wants to go to NYC during the March Break or have a IPAD)

http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=Vl20_HTkaCH_ZM&tbnid=Q7QORXKEB9Y5oM:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.intuitivewu.com%2F2010%2F08%2Fopportunity-cost%2F&ei=lwwqUr-oFafP2wWdjIDYBA&bvm=bv.51773540,d.aWc&psig=AFQjCNFNmWG7yRPjuMmdH0lmMbjwArqgAA&ust=1378573783741741

PRODUCTION POSSIBILITIES CURVE DISPLAYING OPPORTUNITY COST CONCEPT

GUNS

BUTTER

http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=PnI9W8d5yHoNKM&tbnid=aKkfwart-30n-M:&ved=0CAUQjRw&url=http%3A%2F%2Fcommons.wikimedia.org%2Fwiki%2FFile%3APPF_opportunity_cost.svg&ei=7gwqUtPvEYn02gXB_4GQBA&bvm=bv.51773540,d.aWc&psig=AFQjCNHCGMZnLby1uncz7ZeXDpXHXkXhVQ&ust=1378573921888206

http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=PnI9W8d5yHoNKM&tbnid=aKkfwart-30n-M:&ved=0CAUQjRw&url=http%3A%2F%2Fen.wikibooks.org%2Fwiki%2FIB_Economics%2FIntroduction_to_Economics%2FBasic_Definitions&ei=Aw0qUqOHOcPO2wWBnYCADw&bvm=bv.51773540,d.aWc&psig=AFQjCNHCGMZnLby1uncz7ZeXDpXHXkXhVQ&ust=1378573921888206

http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=UimQiWqkykNjRM&tbnid=twabtnr7CXZePM:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.tutor2u.net%2Feconomics%2Fgcse%2Frevision_notes%2Fbasics_choice_opportunity_cost.htm&ei=fQwqUvjUNuTd2QWppICwBA&bvm=bv.51773540,d.aWc&psig=AFQjCNGk2KDwtqKXYxZHgYp6xnhw0YujCw&ust=1378573794793878

Summary

Resources – Human / Capital / Natural Wants > Resources = Scarcity Scarcity Decisions Opportunity Cost Opportunity Costs – Goods & Services

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