ECONOMICS

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ECONOMICS

• CHAPTER 1, SECTION 2-
• SCARCITY AND CHOICE

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I. Scarcity

• A. Definition-Scarcity is the condition that
  occurs when limited resources meet unlimited
  wants and needs.

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II. Allocation

• A. Allocation is a response to scarcity.
• B. Definition-Allocation is the distribution of
  resources which is done to satisfy the greatest
  number of needs and wants.

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II. Allocation

• C. 3 questions must be answered to allocate
  resources effectively
• 1. What to produce?
• 2. How to produce?
• 3. For whom to produce?

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Unlimited wants And needs
Limited Resources
Scarcity
Choices
What to produce?
How to produce?
For whom to produce?
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III. Productivity

• A. Productivity is used to determine if
  resources are being used wisely.
• B. Definition-Productivity is the rate at which
  goods are produced, and the amount produced,
  compared with the work, time, and money needed to
  produce them.

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III. Productivity

• C. Efficiency-Using the smallest amount of
  resources to produce the greatest amount of
  output.
• D. 3 ways to improve efficiency
• 1. Division of Labor-Assigning a small number of
  tasks to each worker.

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III. Productivity

• 2. Specialization-When workers gain expertise in
  their assigned tasks occurs because of division
  of labor.
• 3. Mechanization-Replacing workers with machines
  that work faster and longer hours.