1. It’s all about resources
and wants!
SCARCITY

2. The Problem
Limited Resources
Insufficient to Fulfill our
Wants

3. The Goal
Increase Individual and
Societal Welfare

4. Welfare
Subjective Evaluation of Individual
and Societal
Well Being
“How YOU doin’?”

5. Individual Goals:
What We Want
• Health
• Friends and Family
• Career
• Peace
• Love
• Stuff
03/13/13 Lesson 1: Scarcity 5

6. Social Goals:
What We Want
1. More and better education
2. A cleaner environment
3. More and better health care
4. Greater public safety
5. Less stress
6. Preservation of non-renewable
resources including natural resources
7. Elimination of poverty
03/13/13 Lesson 1: Scarcity 6

7. The Question
Given limited resources,
how do we best use them to
maximize people’s welfare?

8. RESOURCES: HUMAN
CAPITAL
Knowledge and skills of the workforce
Your job in school is to develop your human capital.
03/13/13 Lesson 1: Scarcity 8

9. Human Capital
03/13/13 Lesson 1: Scarcity 9

10. Your Incredible hunka
hunka human capital.
the most important
resource we have.
03/13/13 Lesson 1: Scarcity 10

11. RESOURCES : PHYSICAL
CAPITAL
Goods produced for the purpose
of producing something else
03/13/13 Lesson 1: Scarcity 11

12. Land – Natural Resources
03/13/13 Lesson 1: Scarcity 12

13. Entrepreneurship
Combines other resources, takes a risk, seeks a profit
Famous Amos
03/13/13 Lesson 1: Scarcity 13

14. Money is not a resource
03/13/13 Lesson 1: Scarcity 14

15. Money is not a resource
03/13/13 Lesson 1: Scarcity 15

16. Time is not a resource
03/13/13 Lesson 1: Scarcity 16

17. Time is not a resource
03/13/13 Lesson 1: Scarcity 17

18. Time is not a resource
03/13/13 Lesson 1: Scarcity 18

19. RESOURCES
Resources are:
[+] Human Capital
[+] Entrepreneurship
[+] Physical Capital
[+] Land
Resources are:
[-] Not
Money
[-] Not Time
03/13/13 Lesson 1: Scarcity 19

20. A nation’s wealth is
determined by the
quantity and quality of its
physical and human
resources and the
political and social
infrastructure.

21. SCARCITY
YOU CAN’T HAVE
EVERYTHING
YOU WANT!
The inability of
limited resources
to satisfy people’s wants
03/13/13 Lesson 1: Scarcity 21

22. Scarcity
It’s about
RESOURCES
and WANTS.

23. Which people face
scarcity?
a. Poor
b. Rich
c. Selfish
d. Selfless
03/13/13 Lesson 1: Scarcity 23

24. Scarcity is pervasive
• Rich Athlete
• Donald Trump
• Joe Schmoe
• Dr. Charkins
• The President
• Your parents
03/13/13 Lesson 1: Scarcity 24

25. You can’t eliminate
scarcity

26. But you can learn to
deal with it!

27. The test of scarcity
• It has to be allocated.
• It has a positive price.
• It has an alternative use.
• People who want it have to give
something up to obtain it.
• A choice has to be made
03/13/13 Lesson 1: Scarcity 27

28. Some things that are
scarce
• Pencils • Paper clips
• Yachts • Automobiles
• Steaks • Teachers
• Movies • Shoes
• Economists • Compact Disks
• Dentists • Computers
• Refuse collectors • Computer
programmers
03/13/13 Lesson 1: Scarcity 28

29. Some things that are not
scarce
• Air • Used gum
• Snow in some • Pine cones in
parts of the Wrightwood
country • Sand at the beach
• Cowrie shells in
• Garbage
Mombassa
• Pollution • Drunk drivers
• Dirt
03/13/13 Lesson 1: Scarcity 29

30. Scarcity is the Villain!!!!!!
03/13/13 Lesson 1: Scarcity 30

31. Why do .......
• some very good • colleges turn
students get students away?
mediocre grades? • colleges have large
• hospitals turn classes?
pregnant women • colleges offer so
away? few courses?
• some parents
• servers give less
spend little time
than perfect with their children?
service?
03/13/13 Lesson 1: Scarcity 31

32. Why don’t.......
• we provide organ
transplants for all
• you study 24 hours
who want them?
a day?
• we prevent death
• you spend 24
from dirty air?
hours a day with
• we educate all
your loved one(s)?
young children in
• you sleep more?
their native
language?
03/13/13 Lesson 1: Scarcity 32

33. Who is the villain when:
• You don’t get the service you want at
a restaurant?
• You don’t get the service you want
from the registrar?
• You are put on hold by the
secretary?
• You don’t get tickets to the concert?
03/13/13 Lesson 1: Scarcity 33

34. 03/13/13 Lesson 1: Scarcity 34

35. Your reaction to scarcity
• Yell, scream, whine, moan, whimper
• Accept scarcity and see if there is
anything you can do to remedy or
improve the situation
03/13/13 Lesson 1: Scarcity 35

36. When choices
have to be made,
scarcity is the villain, not
the decision-maker.

37. Attempts to avoid or
ignore scarcity don’t
work.
• I’ll put it on the credit card.
• I’ll get up early to study.
• Let’s get an apartment.
• I need a new car; I can get a loan.
• Let’s go to Vegas.
03/13/13 Lesson 1: Scarcity 37

38. Scarcity: The Problem
Restated
The inability of limited
resources to fulfill
society’s wants.

39. Scarcity is not:
• Poverty
– all poor face scarcity
– all who face scarcity are not poor
• Rareness
– a rare tropical disease
• Doesn’t address needs
– wants, not needs
03/13/13 Lesson 1: Scarcity 39

40. The Goal of
Economic Analysis
• Greater “wealth” for individuals and
society
• Wealth is the subjective evaluation
by individuals of their well being.
03/13/13 Lesson 1: Scarcity 40

41. The Question
Given limited resources,
how do we best use them to
maximize people’s welfare?

42. Main Points
• Resources are limited
• Land, human capital, physical capital, and
entrepreneurship are resources; time and
money are not.
• Scarcity is the inability of our limited
resources to satisfy our wants.
• Wealth is the subjective evaluation of well
being.
• The goal of economic analysis is to
increase individual and societal wealth.
03/13/13 Lesson 1: Scarcity 42