ssef1: scarcity, resources, trade- offs and opportunity costs textbook chapters: 1, 2
TRANSCRIPT
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SSEF1: Scarcity, Resources, Trade-Offs and Opportunity
Costs
Textbook Chapters: 1, 2
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Scarcity• Consumers unlimited wants for
goods and services exceeds the limited resources used to make the goods and services
• or• Resource has more than one
valuable use EX: A large lot of trees that can be used either as Christmas trees or lumber for chairs but not both.
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Scarcity cont.• Once a resource is used up it
can NOT be replaced• If I use the resource, you can
not use it• The resource must be desirable,
someone has to want it
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Resources• a resource is any item used to make a good
or service
• Good: physical item consumers purchase– Ex: cars, MP3 player, cell phone etc
• Service: something someone does for a consumer– Ex: medical, teacher, Metro PCS
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4 Categories of Resources
All resources fit into one of 4 categories
• Natural / Land ResourcesResources that come from the earth
Trees Oil Water Minerals Land
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• Human / Labor ResourcesPeople and their physical and
mental skills to do a particular job
All skills and knowledge are called your human capital
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• Capital Resources / Capital Goods
Physical items made by people that are used to produce other goods / services
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• EntrepreneurshipThe ability to create ideas and
organize tasks in order to produce a good or service
Do not need the physical and mental skills to actually produce – can hire people to do the work
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What do we do about scarce resources?
• Have to allocate scarce resources for production of goods and services
• Allocate: to distribute
• Goods/services have value – Resources are allocated based on value
• High value = more resources
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Trade-Offs• Scarcity leads to choices
• Decide what to and what not to produce
• trade-off - choosing between two options– Make a sacrifice and give something up
– EX: Sleep v Video Games
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Opportunity Cost• The second best alternative you
could have had that you end up giving up – your #2 option when you make your choice
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Unlimited Wants & Needs
Limited Resources
Scarcity
Trade-offs(choices)
Opportunity Costs
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Vocabulary• Scarcity• Resources
– Land– Labor– Capital– Entrepreneurship
• Goods
• Services• Trade-off• Allocation• Opportunity
Cost
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An individual decides to pay $8 to see a movie instead of buying an $8 meal. What is the opportunity cost of the movie?A the satisfaction missed by not
eating themealB the $8 paid to see the movieC the time spent watching the movieD the satisfaction received by going to
themovie