Objectives:
1. Explain why scarcity and choice are basic problems of economics.
2. Identify land, labor, and capital as the three factors of production, and identify the two types
of capital.
3. Explain the role of entrepreneurs.
4. Explain why economists say all resources are scarce.
----------------------------------------------------------------------------------------------------------------------------Three scenarios:
1. Members of a household work together to do the _____________, purchase __________,
make meals, __________________, decide how to spend their money, and decide who
gets to hold the __________________.
2. The leaders of a ______________________ sit at a table for their monthly meeting. They
discuss whether to add a new product to their product line and advertising options on
____________________ and the ________________________.
3. Senators in the ___________________ gather to debate the important issues of the day:
a. How can we ensure that people are well fed and have access to _______________.
b. What limits should the government place on ____________ and international trade?
c. Who gets to control the Internet”
Economists look at the decisions made in each scenario and study those decisions in great detail.
Scarcity & Choice:
 The study of economics begins with the idea that ________________ have everything
they ____________ and _______________.
 A need is something like ________, ___________, _________ (basic items for survival).
 A want is an item that ____________________ but are not ___________ for survival.
Ways to get to school…
>
>
>
>
Instead you want this type of ride…
>
>
>
>
* Because people cannot have everything they need or want, they must consider their options and
___________________________________ will fill their needs the best.
*As a student you have decided to use your time by coming to school instead of staying in bed
and getting a few more hours of sleep.
* Economics is the study _______________________________________________________
and _______________________________________________________.
- Why must people make choices????
____________________ – physical objects such as shoes & shirts.
____________________ – are actions or activities that one person performs for another.
< Because of Scarcity, we in America have a hard time understanding scarcity since our store
shelves are ________________________________________________ of goods.
< Scarcity exists in all ____________, at all _____________.
< ____________________ – implies limited quantities of resources to meet unlimited wants.
< Scarcity is not the same thing as a _____________________.
< A shortage occurs when producers _____________ or ________ offer goods or services at
the current price. They are ______________- sometimes can be long-term.
Factors of Production:
* Resources that are used to make goods and services.
1. _______________
- All natural resources used to produce goods and services.
- Include fertile land, ________, water, ____________, _______, and etc.
2. _______________
- The effort that a person devotes to a task for which that _________________.
3. ____________________
- Any human-made object used to ______________ other goods and services.
* 2 Types of Capital:
- _____________ – human-made objects used to create other goods and services.
i.e. buildings, tools, equipment, and etc.
- An oven in a bakery; a sewing machine in a clothing factory; bulldozer to clear
land for homes
- ___________________ – the knowledge and skills a worker gains through
education and experience.
- A country needs physical and human capital to produce goods and services.
4. ___________________________________________
- The leaders who combine the land, labor, and capital together to make a good
or service.
-They are the risk-takers by starting new businesses, develop new ideas, create
new industries, and fuel economic growth.
-_______________ – Microsoft and __________ – Ford Motor Company
Scarce Resources:
*Economists say that all goods and services are scarce because the ________, ________, and
________ used to create them are scarce.
 Any good that we can talk about would be considered to be scarce since the land, labor,
and capital to produce that good is scarce.
REVIEW:
1. What is the difference between a good and a service?
2. Why is the idea of scarcity a starting point for thinking economically?
3. How is scarcity different from shortage?
4. List and describe the four factors of production.
5. What special advantages does physical capital offer?
6. What role do entrepreneurs play in the economy?