Foundations of Economics: Scarcity and Wants

Key concepts from the lecture notes on scarcity, unlimited wants, cost, and population dynamics.

What is the first foundation stone of economics according to the lecture?

Our world is one of inescapable scarcity.

How is scarcity defined in the lecture?

There is not enough of something naturally to satisfy every conceivable want at zero cost.

Which thing on the surface of the Earth is not scarce?

Breathable air (it's abundant at zero cost).

What is the second foundation stone?

Human wants are unlimited.

What is the Malthusian trap?

The idea that population growth would outpace resources and keep per-person wealth low; humanity would remain poor, but we have since escaped it.

What is the third foundation stone?

Scarcity implies choice implies cost.

What does 'cost' mean in this context?

The value of the sacrificed alternative when making a choice (opportunity cost).

What is the 'ultimate resource' concept and who proposed it?

The idea that human creativity is the ultimate resource that turns nature's inputs into useful goods, proposed by Julian Simon.

What does production mean in the lecture?

Transformation of inputs into outputs; inputs include raw materials, labor, equipment, and must be combined in a non-random way.

What is the virtuous cycle linking wealth and population?

More wealth allows longer life and more people; more people generate more ideas, increasing production and wealth.

What happens when a resource is not scarce in terms of economic problems?

There is no allocation problem and no conflict over its use.

When did the world population first reach 1 billion?

In the mid-14th century.

When did the world population reach 1 billion again?

Around 1820 (early 19th century).