Unit 1.1: Scarcity
Page 1: Introduction to Scarcity
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Objective: Describe and explain concepts of scarcity and opportunity cost through real-world examples.
Current focus: Unit 1, Topic 1.1.
Page 2: Learning Objectives
Topic 1.1: Scarcity
Learning Objective: Define scarcity and economic resources.
Skill 1.A: Describe economic concepts, principles, or models.
Topic 1.2: Opportunity Cost and the PPC
Learning Objective: Define the PPC and related terms.
Explain how the PPC illustrates opportunity costs, trade-offs, inefficiencies, efficiencies, economic growth or contraction.
Skill 4.A: Draw an accurately labeled graph to represent economic models.
Topic 1.3: Comparative Advantage
Learning Objective: Define absolute advantage and comparative advantage.
Explain the benefits of specialization according to comparative advantage.
Skill 1.C: Identify economic concepts using quantitative data.
Page 3: What is Economics?
Economics is the study of behavior concerning how scarce resources are allocated among unlimited needs, wants, and desires.
Choices are necessary because we cannot have everything we desire.
Areas of study: choices of individuals, firms, and governments.
Page 4: Positive vs. Normative Economics
Positive Statements: Based on facts, avoid value judgments (descriptive).
Normative Statements: Includes value judgments (prescriptive).
Economists apply the scientific method in theoretical economics to develop theories.
These theories are then applied in policy economics to address problems and achieve economic goals.
Page 5: Identifying Economic Statements
Positive Economics: 2, 4, 8
Normative Economics: 1, 3, 5, 6, 7, 9, 10.
Page 6: Microeconomics vs. Macroeconomics
Microeconomics: Examines decisions of small economic units (individuals/firms) and their consequences (e.g., supply and demand).
Macroeconomics: Studies the economy as a whole or economic aggregates (e.g., inflation, government spending, unemployment).
Page 7: Identifying Economic Concepts
Macroeconomics Statements: 1, 2, 4
Microeconomics Statements: 3, 5, 6.
Page 8: Key Economic Assumptions
Questions to consider:
What and how much to produce?
How to produce it?
From whom to produce it?
Reasons: Scarcity leads to limited resources and unlimited wants.
Page 9: Choices from Scarcity
Individuals/societies must make choices due to resource scarcity.
Factors of Production: Land, Labor, Capital, Entrepreneurship.
Payment Forms: Rent, Wages, Interest, Profit.
Page 10: Opportunity Cost
Opportunity Cost: The benefit forgone of the next best alternative when a choice is made.
Important in cost/benefit decision-making.
Example: Opportunity cost of sleeping an extra hour vs. watching content online.
Page 11: Making Choices in College
Title: "Econ of College"
Choices impacting good grades: Social life, enough sleep.
Page 12: Trade-offs vs. Opportunity Cost
Trade-offs: All alternatives given up when making a choice.
Opportunity Cost: Most desirable alternative sacrificed.
Example: Trade-offs of attending college (e.g., attending events, working).
Page 13: Application of Economics
Key principles:
Unlimited wants & limited resources = scarcity.
Choices arise from scarcity, resulting in trade-offs.
Aim: Maximize satisfaction.
Decisions based on marginal costs vs. marginal benefits.
Real-life situations analyzed through models and graphs.
Page 14: Evaluating Opportunity Costs
Questions to consider for evaluating opportunity costs of college (e.g., attending Harvard vs. UH).
Page 15: Marginal Analysis
Marginal Cost: Additional cost above previously incurred costs.
Marginal Benefit: Additional benefit above what has accrued.
Page 16: Example of Marginal Analysis
Cost and benefit analysis of watching a movie multiple times:
1st time: Benefit = $30, Cost = $10.
2nd time: Benefit = $15, Cost = $10.
3rd time: Benefit = $5, Cost = $10.
Total: Benefit ($50) exceeds Cost ($30) for first two views.
Page 17: Visual Interpretation
Graph interpretation showing cuteness vs. number of legs.
Page 18: Probability and Relationships
Graph depicting probability of being right in dating relationship status.
Page 19: Childhood Preferences
Personal enjoyment graphs related to different age groups and interests.
Page 20: Preferences in Video Games
Graphs depicting usefulness of shotguns in different video games.
Page 21: Decision Principles
If Marginal Benefits (MB) exceed Marginal Costs (MC), proceed with the action.
If MC exceeds MB, then do not proceed.
Page 22: Importance of Marginal Analysis in Economics
Marginal Analysis: Importance of evaluating additional benefits/costs while making decisions.
Example of going to the mall: Continuous evaluation of benefits and costs.
Decision-making influenced by situational changes (e.g., unexpected encounters).