Introductory
Economics
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Specialization and Opportunity Cost
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Life is full of choices. People make many choices everyday.
Choices, often called decisions, vary in their difficulty. Regardless of
the level of difficulty, all choices carry costs and benefits. Young
children make many choices/decisions. Research reveals that they
should begin to learn decision-making skills at an early age.
Learning basic economics concepts and principles fosters the
development of good decision-making skills.
Economics is the study of choice under scarcity. Our resources are
limited, and our wants are unlimited. Because of scarcity, we are
unable to satisfy all of our wants at the same time. We must make
choices about how to use our limited resources.
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Resources (inputs) are things used to produce goods and services.
People (Sellers/Producers) use human resources, natural
resources, and capital resources to produce goods and services.
Sellers/Producers must make choices about what to produce with
the limited resources.
People (Buyers/Consumers) use or consume goods and services
(outputs).
People have different skills and abilities.
People use their skills and abilities to specialize in the production of
certain goods and services. (Specialization)
Because people specialize, interdependence occurs.
People depend on others to provide goods and services they need
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and want. Interdependence results
in trade/exchange of G&S. 12
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Scarcity and Choice
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Producers combine natural, human, and
capital resources to make goods and services.
The amount of each resource the producer uses
varies based on the good or service being
produced. A producer who combines the
resources and takes the risk of starting a new
business is called an entrepreneur. To have a
successful business, the producer or
entrepreneur needs consumers to purchase the
goods or services produced.
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Consumers use goods and services. Producers depend on consumers to use their product
and consumers depend on producers to make the goods/services they need and want.
This dependency on each other for goods/services is called interdependence.
The interdependence that exists between producers and consumers requires that each pay
careful attention to the other. Producers must be aware of consumer likes and dislikes to
know what to produce, how much of it to produce, and when to produce it. Consumers
must understand the difficulties of production and provide good consumer feedback to
the producer.
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1. Oh Scarcity!(Tune: Oh, Christmas Tree)
Oh, Scarcity! Oh, Scarcity!
We can’t have all
The things we want.
Oh, Scarcity! Oh, Scarcity!
We cannot have it all, you see.
We really want a lot of stuff.
But sometimes there’s just not
enough.
Oh, Scarcity! Oh, Scarcity!
We cannot have it all, you see.
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3. Oh Give Me a Choice (Tune: Home on the Range)
Oh give me a choice,
Oh, a difficult choice,
And I’ll think about what I could use.
I’ll have to decide,
With my eyes open wide,
What I’ll give up and what I will choose.
Opportunity cost!
It’s the thing you give up when you choose.
It’s the price that is paid
When a choice must be made.
It’s the thing that I surely will lose.
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7. Buying and Selling (Tune:
Row, Row, Row, Your Boat)
Goods, goods, goods are things
That we make and use.
We’re buying and selling
And buying and selling
Any goods we choose.
(Round song)
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