ECON QUIZ: Scarcity

Import

Bringing goods in

Export

Trading goods with someone outside of general zone

Shortage (A Non-Permanent Condition)

An unavailable amount of goods or services caused by external events (Can be caused by holidays, wars, etc)

Economics

The study of how people seek to satisfy their needs and wants by making choices

Scarcity (Permanent Condition)

Limited quantities of resources to meet unlimited wants and needs (Always exists because goods and services are produced from limited resources)

Need

Essential Good

Want

Non-Essential Good

Factors of Production

Resources used to make all goods and services

Land

Natural Resources

Labor

Physical and mental effort that people use to create goods and services

Human Capital

The skills and knowledge gained by a worker through education and experience

Physical Capital

Human-made goods that are used to produce other goods and services

Physical capital allows for

extra time, knowledge, productivity, research, development

Physical capital eliminates…

Extra costs

Physical capital is

more profitable and helps shareholders

High-Tech Machinery

Allows corporations to stay competitive with foreign competition, avoids tariff and supply-chain issues

Corporate Responsibility

Customers, Stakeholders, Employees

Intrinsic Motivation

Genuine enjoyment/find interest or meaning

Extrinsic Motivation

External reward/pressure

Incentive

To encourage people to make certain choices or behave in a certain way

Positive Incentive

leave you better off if you do what is asked of you

Negative Incentive

Leave you worse off if you don’t do what was asked of you

Stakeholders

Include any group or individual impacted by a business

Shareholders

Hold equity or shares in a corporation

Physical capital….

Is utilized within the production process, helps shareholders, consumers receive better quality and cheaper costs

Formula

Total Revenue (Cost x Quantities Sold) - Total Cost = Profit

Physical capital also…

Limits labor costs while increasing profit if revenue stays the same or increases

Trade-Offs

Alternatives that we sacrifice when we make a decision

Business Trade-Off

Trade-Offs in business that typically involve the factors of production (land, Labor, capital)

Societal Trade-Offs

Guns or Butter: A country decides to produce more military goods (“guns”) which enables fewer resources for consumer goods (“Butter”) EX: Iran, Ukraine, Russia

Opportunity Cost

The most desirable alternative give up as the result of a decision

Types of Opportunity Cost

Global: Use of planetary resources, corporate: how a business chooses to use factors of production, Consumer: How people spend their money, How individuals spend their time

How does the world alternative relate to “Opportunity Cost”?

Opportunity costs forces people to make alternative or different choices rather than the original choice.

“Think At The Margin”

Determining how much more and or less of something to do.

Cost/Benefit Analysis

There opportunity costs and benefits are the two main parts of cost/benefit analysis. They are used to make a decision because they force people to acknowledge both sacrifices and gains.