Goals – The students will understand:
1. Scarcity and its impact on economics.
2. Wants and needs and the impact on
economics.
3. Rationing and give examples.
4. The three economic questions.
5. The definition of economics.
6. What the Production Possibilities Frontier is.
7. What competition is and why it exists.

Definition: The condition in which our wants
are greater than the resources available to
satisfy those wants.
◦ A need is a basic requirement for survival and
includes food, water and shelter.
◦ A want is a way of expressing a need. Since a
variety of wants can satisfy a need, wants tend to
be broader than needs.

People want the things they think will make
them happy and satisfied.
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Are people’s wants ever fully satisfied?
What kinds of things do you want?
How do you get what you want?
Resources are used to fulfill wants?
 All resources are limited and come at a cost

Scarcity means making choices
◦ Non-material things, e.g., respect/affection, are
also scarce
 Definition:
Rationing is the
controlled distribution of scarce
resources, goods, or services, or
an artificial restriction on demand.
◦ A ration is one’s allowed portion
of the resource being
distributed.
 Rationing
device: some way to
decide who gets what portion of
all the resources and goods
available
◦ E.g., ration coupons from WWII
◦ What are some other forms of
rationing?

1. What goods and services should be
produced?
◦ Should the economy focus on being self-sufficient
or concentrate on what it is good at?
◦ Should it devote resources to health and education
or defense and policing?
◦ Should we devote more resources to housing?
◦ Should an economy use resources producing goods
that are essentially useless - like 'free' toys in cereal
packets, football sticker cards and so on?

2. How should goods and services be
produced?
◦ Should the economy use a system that is labor
intensive, thereby ensuring everyone who wants a
job has one, or should we use more efficient
methods of production that involve the use of
machines, even if this means more pollution and
fewer jobs?
◦ Should we devote more land to production and thus
solve some problems of feeding the population at
the expense of encroaching into areas of natural
beauty?

3. Who should get the resources that the
economy has produced?
◦ Should an economy be geared to providing goods
and services to every person as equally as possible
or should those who work hard get more?
◦ How do we distribute our resources?

Goals: Students will understand:
◦ The definition of economics.
◦ What the Production Possibilities Frontier is.
◦ What competition is and why it exists.



Write down five questions or statements that
you think have something to do with
economics.
Now share your ideas with the rest of the
class.
Given the range of comments and issues
collected by the group could you now write
down a definition of what economics is?
The
science that
studies the choices of
people trying to satisfy
their wants in a world
of scarcity.

DEFINITION of 'Production Possibility
Frontier - PPF' - A curve depicting all
maximum output possibilities for two
goods given a set of inputs (resources,
labor, etc.).
◦ The PPF assumes that all inputs are
used efficiently.


When an economy is operating at full capacity
it is operating at maximum production.
Production possibilities help us understand
the concept of opportunity cost, scarcity, and
choice.

Definition: the rivalry among sellers trying to
achieve such goals as increasing profits,
market share, and sales volume by varying
the elements of the marketing mix: price,
product, distribution, and promotion.
◦ The effort of two or more parties acting
independently to secure the business of a third
party by offering the most favorable terms.



Economists believe that competition exists
because of scarcity.
If enough resources existed to meet demand,
people would not have to compete for goods,
services, etc.
Why will there always be competition?