WHAT DO THEY HAVE TO DO WITH
ECONOMICS ?
THINK OF
EVERYTHING
YOU WOULD HAVE
IF YOU COULD
HAVE
ANYTHING
YOU WANTED
NOW MULTIPLY THAT BY
7 BILLION!
LY
B
I
S
S
O
P
N
’T
O
N
E
S
R
E
A
C
R
E
Y
U
R
D
O
E
O
S
H
B
E
T
Y
R
R
E
H
V
G
ENOU TO GIVE E AT THEY
H
H
T
T
R
G
N
EA RYTHI
!
EVE
AND
T
N
A
W
NEED
?
UNIT 1 . 1
SCARCITY, CHOICE
AND
OPPORTUNITY
COST
THE
ROOT of it all:
SCARCITY
The condition that constantly exists as a
result of society not having enough resources
to produce what everyone needs or wants
CONCLUSION
all economic participants must make
choices about how to carefully
allocate and use our scarce resources
if done carele"ly, we could have n#ds
unmet and scarce resources wasted!
LIMIT
ED
RESO
URCE
S FO
R
NEED
S AN
D WA
NTS
UNLI
M
ITED
ECONOMICS
Defined
The study of how individuals, firms, and governments make choices to efficiently use
limited resources to achieve the maximum satisfaction of social needs and wants
how
do w
e dea
l
there are 2 studies
MICROECONOMICS
Study of individuals, firms, and government behavior, at a
specific level, within markets
MACROECONOMICS
Study of the aggregate economy as a larger whole, and its
interactions with other economies
scar
w i th
city
?
ECONOMIC
DECISION -MAKING
Consumers, firms, and governments together answer…
THE
THREE ESSENTIAL QUESTIONS
goods & services should be produced?
t
a
h
w
should they be produced?
W
O
H
should they be produced?
R
FOOM
H
W
T RADE-OFFS and
OPPORTUNITY COSTS
,
n
o
i
s
i
!
c
p
e
u
d
n
a
e
v
g
i
in re g
k
a
m ns a
n
e
wh optio
r
e
h
ot
TRADE-OFFS
Each of the alternative options given up when
making a decision
OPPORTUNITY COST
The most
desired trade-off of a decision
Let’s
!
E
T
A
L
U
M
SI
WHAT IS THE
OPPORTUNITY COST
OF:
?
N
O
C
E
P
A
G
N
I
K
TA
?
E
G
E
L
L
O
C
O
T
G
N
GOI
WHAT IS THE
OPPORTUNITY COST
OF:
K
C
U
R
T
G
N
I
S
A
E
O
T
INCR
M
0
1
M
O
R
F
N
O
I
T
C
U
PROD
30M?
TRUCKS
AND
R
A
C
G
N
I
CARS
S
A
E
R
O
INC
T
M
0
1
M
O
R
F
N
O
I
T
C
U
PROD
25M?
COMBO A
COMBO B
10 million
30 million
25 million
10 million
WHAT IS THE
OPPORTUNITY COST
OF:
COMBO A
MILITARY
GOODS
CONSUMER
GOODS
COMBO B
500 million tons 150 million tons
500 million tons 800 million tons
Y
R
A
T
I
L
I
M
G
N
I
S
A
M
0
INCRE
5
1
M
O
R
F
N
O
I
T
C
U
D
?
O
S
N
PR
O
T
M
0
0
5
TONS TO
AND
R
E
M
U
S
N
O
C
G
N
I
S
A
E
R
M
C
0
N
0
I
5
M
O
R
F
N
O
I
T
C
U
D
?
O
S
N
PR
O
T
M
0
0
8
TONS TO
GUNS OR BUTTER DILEMMA
GUNS OR BUTTER DILEMMA
U.S. DE
FENSE
SPEND
ON THE
ING
F22 RA
PTOR (
2011)