Scarcity and the Study of Economics

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Scarcity and the Study of Economics
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FYI

• We witness scarcity with each years hot new
  toy. Inspired by hunter President Teddy
  Roosevelt, Americans coveted the teddy bear in
  1906. Cabbage Patch dolls were big during the
  1980s, as were Tickle Me Elmos in 1996. By 1999
  Game Boys Pokémon was the rage with a 10-cent
  trading card. The most-prized first-edition
  pocket monsters were in such short supply that
  they commanded from 8 to 182.

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The Fundamental Economic Problem

• Scarcity is the condition where unlimited human
  wants face limited resources.
• Economics is the study of how people satisfy
  wants with scarce resources.
• Needs are required for survival wants are
  desired for satisfaction.
• http//www.mcwdn.org/ECONOMICS/NeedWant.html

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TINSTAAFL

• Someone has to pay for production costs, so There
  Is No Such Thing As A Free Lunch.

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Question

• Why do you think scarcity is an issue with the
  rich as well as the poor?
• It is a human trait that few people, regardless
  of their economic status, are satisfied with what
  they have.

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Three Basic Questions

• 1. What must we produce?
• 2. How should we produce it?
• 3. For whom should we produce?

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The Factors of Production

• Factors of production are resources necessary to
  produce what people want or need.
• 1. Land is the societys limited natural
  resources.
• 2. Capital is the means by which something is
  produced such as money, tools, equipment,
  machinery, and factories.

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• 3. Labor is the workers who apply their efforts,
  abilities, and skills to production.
• 4. Entrepreneurs are risk-takers who combine the
  land, labor, and capital into new products.

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• Why are entrepreneurs an economys driving force?
  
• Their abilities to start new businesses and
  introduce new products may re-energize a sluggish
  economy or strengthen a successful economy.