Economics and Scarcity

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Economics and Scarcity
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What is Economics?

• Economics is the study of the choices that people
  make to satisfy their needs and wants.
• Scarcity is the basic problem of economics
  because our needs and wants are always greater
  than our available resources.

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Scarcity and Shortages

• Scarcity occurs when there are limited quantities
  of resources to meet unlimited needs or desires

• Shortages occur when producers will not or cannot
  offer goods or services at current prices

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Two Definitions of Scarcity

• A situation in which human wants are greater than
  the capacity of available resources to provide
  for those wants.
• A situation in which a resource has more than one
  valuable use.

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Determine whether the following do or do not
illustrate the concept of scarcity.

• Old economics textbooks collected in a bookcase
  near the teachers desk with a sign that says
  Free books, take as many as you want. The books
  have been there for three years.
• Not scarce. No alternative valuable use.

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• 2. Old economics textbooks collected in a
  bookcase near the teacher s desk with a sign
  that says Free books, take as many as you want.
  Another sign posted in the hallway says 10 paid
  for any recycled textbook. Bring books to the
  Principals office.
• Scarce. The books may be read or they may be
  recycled. Two valuable uses.

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• 3. One economics textbook, five students who wish
  to do well in the economics course, and an
  important test in class the next day.
• Scarce. The one book could be used by five
  different people it has valuable alternative
  uses.

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• 4. Petroleum in Japan, a country without its own
  oil fields and without oil reserves.
• Scarce. Petroleum has many valuable uses in
  Japan.

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• 5. Petroleum in Saudi Arabia, a country with many
  oil fields and oil reserves.
• Scarce. Petroleum has many valuable uses in Saudi
  Arabia, and it can be sold to other people in
  other countries. Several valuable uses.

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Which of the following statements is not
consistent with the concept of scarcity?

1. People are scarce because they have many valuable
   uses in the world.
2. Trash is scarce because you rarely see much of it
   around unless you go to a landfill.
3. Knowledge is scarce because what we wish to know
   is so great relative to what we do know at this
   time.
4. Electricity is scare because it has many valuable
   uses.

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Which of the following statements is not
consistent with the concept of scarcity?

1. People are scarce because they have many valuable
   uses in the world.
2. Trash is scarce because you rarely see much of it
   around unless you go to a landfill.
3. Knowledge is scarce because what we wish to know
   is so great relative to what we do know at this
   time.
4. Electricity is scare because it has many valuable
   uses.

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Which of the following people must deal with
scarcity when they make decisions during the day?

1. The richest person in the world.
2. A homeless person living in New York City.
3. A commuter living in the suburbs and working in
   the city.
4. All of these people must deal with scarcity.

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Which of the following people must deal with
scarcity when they make decisions during the day?

1. The richest person in the world.
2. A homeless person living in New York City.
3. A commuter living in the suburbs and working in
   the city.
4. All of these people must deal with scarcity.