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1.1 Scarcity and the Science of Economics

Economics
by

Rebecca Armstrong

on 12 October 2015

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Transcript of 1.1 Scarcity and the Science of Economics

1.1 Scarcity and the factors of production
Look at the Cover of your Textbook.

1. What are the biggest symbols? What do you think they represent (connection to economics)?
2. What are the smallest symbols and what do you think they represent?
3. Which symbol do you think is most important?
4. What different ways can you categorize these pictures?

In groups of 2, create a word web around "economics" using the thoughts you came up with. Come up with a sentence about how Economics affects the lives of people.
economics
economics- the study of how people try to satisfy seemingly unlimited and competing wants through the careful use of relatively scarce resources.
Why learn economics?
a basic understanding of economics can help us make sense of the world that we live in
scarcity- the fundamental economic problem of meeting people's virtually unlimited wants with scarce resources
or......
unlimited wants and limited resources
Scarcity forces us to make choices by making us decide which options are important to us.

There are lots of ways you could spend your money: a new video game, attending a concert or UT FOOTBALL GAME, dinner and a movie with friends, paying your car insurance.How do you choose?
Needs vs Wants
What is the difference in a need and a want?
Need- a basic requirement for survival
want- something we would like to have but is not necessary for survival
Make a list of needs vs wants... you have two minutes starting when I say "GO"
Look at your list. Do limitations on your time and money affect these needs and wants? If so, how?
we focus on the things we need first, before focusing on our wants.
THREE BASIC QUESTIONS
WHAT to produce
how to produce
for whom to produce
Why do societies have to answer these questions?
Because of scarcity!
the world has scarce resources and societies need to make careful choices about the way they use these resources
Entrepreneurs play a key role in turning the scarce resources into goods and services.

Entrepreneur- a person who is able to create new products with existing resources
factors of production-resources required to produce the things we would like to have
factors of production
land- natural resources or other "gifts of nature" not created by human effort
Capital- All of the physical resources used to produce and distribute goods
labor- people with all their efforts, abilities and skills
entrepreneurs- a risk-taker in search of profits who does something new with existing resources.
Partner up
You own a business that designs and sells t-shirts. Brainstorm what factors of production you need to produce your t-shirts.
Make sure to break your factors of production into each of the 4 categories
you have 5 minutes... be as thorough as possible!
SCARCITY
Standards: 2.1, 2.3, 2.5, 3.3

Objectives:
Explain why scarcity and choice are the basis for economics.
Describe what entrepreneurs do.
Define the factors of production.
Explain how scarcity affects the factors of production.

Should resources be used to build a new school, repair on old highway, or construct a new recreation center?
Should American producers use resources to make goods for national defense or to provide services for retired people who are too old or too ill to work?
How should we obtain crude oil to meet our energy needs?
How much pollution should we allow firms to generate when producing goods?
How should hogs be raised before they become food?
Who should receive the limited supply of flu shots?
Who should benefit from the construction of a new school?
Who should a shoe manufacturer market their products to?
Congratulations!
Just by answering those questions, you already have an economist's way of thinking! One of the key concepts of economics is....
Economics involves:
1. examining how individuals, businesses, and governments choose to use scarce resources
2. organizing, analyzing, and interpreting data
3. developing theories and economic laws
Entrepreneurs put together land, labor, and capital to provide a new product or service. They take risks in hopes of gaining rewards.
In early 2004, Mark Zuckerberg and a college roommate created Facebook. They wanted to create an online social network for students. They invited students and in a few weeks, nearly 2/3 of the students at their university had joined. Within months, Facebook had networks at thirty other universities.

That summer, Zuckerberg made contact with investors. One offered the $500,000 to work on Facebook full time. They left college and worked day and night writing computer code. By the fall, Facebook had a million members. When investors gave the partners another$12.7 million in funds, they hired more workers and moved into offices.

Members and like Facebook because it was free, they could post what they wanted, and users could control who could see their posts. Advertisers like Facebook because they can target their ads.

To grow, Facebook added networks for high schools and workplaces. By 2008, the company had networks in several countries and more than 70 million users.

With growth, Facebook had to keep buying more computers and hiring more software engineers, salespeople, and customer service staff. Despite rising costs, growing income Zuckerberg and other shareholders rich. Several companies have offered to buy Facebook but Zuckerberg won't sell. He wants to continue to manage the company's growth himself.
1. Recall the factors of production for Facebook:
What land, labor, capital, and entrepreneurs were used in creating Facebook?
2. What needs or wants does Facebook meet?
3. Why do you think Facebook grew so quickly?
4. What risks did Zuckerberg take? Did it pay off?
Just like you have to choose, so do your neighbors, your school, the gas station on the corner, television networks, and the U.S. Congress.

Scarcity forces us ALL to make choices. Economics is the study of how we as individuals, the businesses in town and across the country, as well as our government makes the choices when faced with a limited supply of resources.
Full transcript