SCARCITY AND CHOICE NOTES

• A need is necessary for survival, a want is something we desire and scarcity comes in when we realize that not everyone can have what they want/need

• Scarcity means that everyone cant have what they want or need

• Always exists because our needs and wants are always greater than our resource supply

• Goods and services are scarce because they are all made from resource supplies

• Climate change affects scarcity

• Shortages: occur when producers will not or cannot offer goods or services at current prices

• When a service/good is unavailable

• Can be temporary or long term

• Examples: holidays, wars, droughts

• No cero risk sum: There's always a risk, always something you loose, cant have it all

• Trade-offs: alternative that we sacrifice when we make a decision (scenario)

• Opportunity cost: The most desirable alternative given UP as a result of a decision (result of the decision)

• whenever a course of action has been decided, a trade-off has been made.

• Every choice has a value to you

• Value has 2 parts:

• Benefits: Positive results produced by the choice made, including the return

• Costs: The equivalence of a monetary value. (can be time, money, relationships

• Cost benefit analysis (CBA): A process that involves analyzing what decisions to make and which to give up. Its basically analyzing whether the cost outweigh the benefits or if the benefits outweigh the cost.

Factors of Production

• Land: natural resources used to make goods and services

• Labor:

• Capital: any human made resource that is used to create other goods and services

• Physical: all human made goods that are used to produce other goods and services (Capital goods)

• Human: skills and knowledge gained by a worker through education and experience

• Entrepreneurs

• People who build a new business using the capital and labor provided. They put all the above together. They take risks.