15. Problem 2: Human wants are
Our wants are without limit and many of them
cannot be satisfied.
This is because there are simply not enough
resources to make all the goods and services
we want and need.
17. Task 1 : Goods/Services
MATCH THE TERMS
WITH THE DEFINTIONS.
Complete part 1 of
18. Problem 3: Scare resources have
Wants unlimited but resources are scarce.
People, nations and the world must therefore
choose how scarce resources are to be used.
19. There is a limited amount of resources such as raw materials,
machines, factories and skilled workers. But there are a number
of different ways in which they can be used.
Resource allocation therefore involves deciding how best to use
scarce resources to satisfy as many needs and wants as possible
Problem 3: Scare resources
have alternative uses
Similarly, people and governments only have a limited amount
of money but have many needs and wants to satisfy
Defence? Health care?
21. Handout H5 – Dam and NHS
• What is the economic problem in each of
• For each decision described in the articles,
what is being sacrificed and why?
• Who are the winners and who are the losers
from these decisions?
22. Put yourself in this man’s
• You are the UK Chancellor of the Exchequer.
Last year he spent £710bn, now it is your turn,
will you spend it differently?
The opportunity cost of a choice is the value
of the best alternative forgone.
= The value of what you have given up.
“If you spent the money on an original iPod
in 2001 on Apple stock ($499), you would have
$14,513.78 today” (2010).
31. Your Task: Debate
UAE is hosting the 2020
Design a poster that’s divided
in two to indicate:
Positives (Group 1)
Negatives (Group 2).
Build the economic problem
and opportunity cost into your
32. Opportunity cost
Opportunity cost is the cost of choice
• What would you buy with US$10?
• How should the government spend US$250 million?
(Or, should the government cut taxes by US$250 million?)
• What occupation will you choose when you finish your studies?
• How should a new business invest US$20 million?
• Should we conserve more natural resources?
… and what are the next best alternatives foregone?
33. Production possibility curves
• Production possibility curves (PPCs) show the maximum
combined output of two or more products a firm or an entire
economy can produce with its available resources
• Resources are being used efficiently if they are producing their
• But, because resources are limited, producing more of one
product means producing less of another
• PPCs are therefore a useful way of showing the opportunity
cost of producing more of one product in terms of how much of
another must be given up