Economics, Scarcity

and Choices

KEY UNDERSTANDING/S:Scarcity of resources is the basic economic problem. Because of scarcity, an individual in particular (and the society in general) has to choose how to utilize the resources to satisfy the unlimited wants of people.

KEY QUESTION/S:What is the basic economic problem and what is its implication on the life of each individual

Bernardo M. Villegas

“ economics is a social science that studies and seeks to allocate scare human and nonhuman resources among alternative uses in order to satisfy unlimited human wants and desire”

DR. TERESO S. TULLAO JR., “ Economics is a social

science that deals with the study of scarce resources among unlimited and competing uses to satisfy human needs”

GERARDO P. SICAT

“ Economics is the study of opportunities and obstacle all of us must confront as we seek to satisfy our desires and needs”

ROGER LEROY MILLER

“ Economics concerns situations in which choices must be made about how to use limited resources, when to use them, and for what purposes”

Ronald Wonnacot Paul Wonnacot“ Economics is the study of how people make their living, how they acquire the food , shelter, clothing, and other material necessities and comforts of this world. It is the study of the problems they encounter and of the ways in which these problems can de reduced”

“ Economics is the study of mankind in the ordinary business of life”

Thomas Hailstone

“ Economics is a science that is concerned with production, distribution and consumption of goods and services”.

What is the fundamental

economic problem?

Why is this Problem always Arises?

What peopleMust do

To avoid thisProblem?

Other alternative uses of a resource given up in favor of the chosen alternative. (Trade – Off)

The second best alternative use of a resource forgone.

Analyze Nicole’s decision

p. 5.(Trade Off)

Economic problem

IF YOU WERE NICOLE WHAT WILL YOU PRIORITIZE TO SATISFY YOUR NEED?

HOW DID SHE COME UP WITH HER DECISION?

WHAT IS HER FINAL DECISION? WHY?

Analyze Joseph’s decision in using his time for work and study p. 6-7.

(Opportunity Cost)

If you were in his situation, what will you prioritize? Why?

In budgeting time,What do you think the options of Joseph to divide his time between working and studying?

Make your own analysis:Suppose you passed the entrance examination in the top three schools you considered for college. Where will you enroll? To help you pick up the right choice, come up with a set of criteria that will guide you in evaluating your choices.

Criteria for Decision Making

University A

University B

University C

Name of University1. Parent’s approval2. Distance from home3. Reasonable tuition fee4. School mission-vision5. Quality of EducationTotal Score

What is your realization of your analysis?

How did apply trade-off and Opportunity Cost in this scenario?

SCARCITY is the fundamental economic problem.

RELATIVE SCARCITY – that one may lack some resources but could have plenty of others.

RESOURCE considered scarce if meets two conditions 1. it must be useful. 2. the resource must be limited in supply relative to the demand for them.

THE ECONOMIC PROBLEM OF CHOICE:

TRADE OFF – are alternatives given up in choosing a particular use of resource.

OPPORTUNITY COST – next best alternative use of a resource forgone. All decision bear opportunity cost.

CONCERNS OF ECONOMICS: WHAT TO PRODUCE – know what

people need. Types of resources to be used in the production of goods and services.

HOW TO PRODUCE - process of production. Method of production, labor intensive (manpower) or capital intensive (use technology)

HOW MUCH TO PRODUCE – know particular product to produce. (Surplus and Shortage)

FOR WHOM TO PRODUCE – consumers, (size of income, commodities)

HOW TO PRODUCE MORE OVER TIME – economic growth is the goal of every producers. Sustain the needs of the people, both present and future generations, needs study, research and discipline.

DISCIPLINES

IMPORTANCE OF STUDYING ECONOMICS PEOPLE AQUIRE PROPER SKILLS AND KNOWLEDGE TO DEAL WITH

SACARCITY. LEARN TO EXPLORE RESOURCESAND USE THEM IN THE MOST

PRODUCTIVE WAY. SATISFIES THEIR NEEDS ADEQUATELY AND STILL HAVE ENOUGH

RESOURCES FOR FUTURE GENERATIONS TO USE. HELPS PEOPLE BETTER UNDERSTAND THE FUNCTIONS OF ECONOMY AND THEIR ROLES IN THE WEALTH CREATING PROCESS. RECOGNIZE THE IMPORTANCE OF WORKING HARD, PAYING TAXES AND

SPENDING MONEY WISELY. PROVIDES PEOPLE WITH COUNTLESS OPPORTUNITIES TO MAKE THEIR

LIVES BETTER AND MORE MEANINGFUL. LEARN TO TAKE ADVANTAGE OF TEACHONOLOGIES THAT CAN OPTMIZE

THEIR TIME AND DEVELOP THEIR TALENTS AND SKILLS. BROADENS PEOPLE’S PERPECTIVE OF THE SOCIETY. RECOGNIZE THE IMPORTANCE OF SHARING RESOURCES AND OF SOLVING

PROBLEMS COLLECTIVELY.

Microeconomics

Study of the activities, behavior,

decisions, and interactions of the

small units of economy

Examines how price changes in cellular phones affect the number of cellular

phones produced and sold.

Macroeconomics

Study of economy as a whole. deals with the behavior and decisions of the government, the labor sector, and other large unit of

economy.Examines the overall prices, production

and income. It also covers the effects of money

supply and taxation on the overall

employment and income of economy.

Division of Economics

Social Science

Economics

Scientific Method

Because it use scientific method in studying the relationship of different units of society.

A study of how society decides to use its scarce resources in order to satisfy to the unlimited wants and needs of an individual in the society.

Identify the Proble

mMake

Assumptions

Gather Data

Analyze the Data

Recommend / Make Conclusio

n

What is the relationship between the degree of

necessity of product and the magnitude of the

effect of price increase on the quantity demanded of

such product?

The greater degree of necessity of a product,

the less responsive quantity demanded

would is a price increase.

Interview costumers and owner of stores.

Determine which goods and services have

quantity demanded that are more

responsive to price increase.

Examine the newly gathered data match

the previously formulated

assumptions

The greater degree of necessity of a product, the lesser the effect of a price increase on the quantity demanded of

such product.

THE SCIENCTIFIC METHOD

Interview your parents or whoever manage your family’s budget. Use the following guide questions:

1. How many are you in your family?2. How many are breadwinners?3. How does your family earn on a monthly basis?4. How does your family allocate your income?5. What does your family do when you run short of

budget?6. What values and skills do your parents teach you

to help you become wise decision - maker?

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