Scarcity Fundamentals
This is the basic economic problem where wants are unlimited but resources are limited.
What is scarcity?
These are tangible items, like a smartphone or pizza, that satisfy human wants.
What are goods?
This person organizes factors of production to start a business and hopes for profit.
Who is an entrepreneur?
This is the value of the next-best alternative you give up when making a choice.
What is opportunity cost?
This graph shows the maximum combinations of two goods an economy can produce with full resources.
What is a production possibilities curve?
This term describes a temporary lack of a good at the current price, unlike scarcity which is more permanent.
What is a shortage?
These are actions performed by others, such as a teacher lecturing or a mechanic fixing a car.
What are services?
In the U.S. economy, entrepreneurs face this potential downside, like losing invested money.
What is financial risk (or losing money)?
All economic decisions involve these because resources are limited.
What are trade-offs?
Points on the PPC curve represent this, meaning no waste in resource use.
What is efficiency?
Scarcity forces societies to decide these three things: what to produce, how to produce it, and who gets it.
What are allocation choices (or "what, how, and for whom")?
For a product like a smartphone, this factor of production includes the natural resources like minerals used in its components.
What is land?
A key reward for successful entrepreneurs is this, which can come from business profits.
What is financial gain (or profit)?
At Heritage High School, allocating budget to sports equipment instead of new computers is an example of this.
What is a trade-off?
This happens when the PPC shifts outward, allowing more production of both goods.
What is economic growth?
In this example, scarcity of ________ (HINT: A Type Of Resource) might force you to skip a movie to study for a test.
What is time (or money/resources)?
This type of capital refers to tools and machines, while the other involves workers' skills gained through training.
What is physical capital (and human capital)?
Entrepreneurs encounter this risk when market demand changes unexpectedly, potentially leading to business failure.
What is market uncertainty (or competition/demand shifts)?
In a job scenario, if your current part-time gig pays $6/hour and a new one averages $6.50 with tips, this is the opportunity cost of switching.
What is the $60/week from the old job (or the foregone earnings)?
Operating inside the PPC indicates this, leading to wasted potential and lower output.
What is underutilization?
Unlike a shortage, which can often be resolved by a price increase, scarcity is an ongoing condition that cannot be eliminated because it stems from this fundamental mismatch in the economy.
What is unlimited human wants (and limited resources)?
Combining physical and human capital boosts this in production, but a company might skip annual upgrades if the added output doesn't justify the expense.
What is productivity (or efficiency)?
Beyond profit, entrepreneurs in the U.S. enjoy this non-monetary reward, like autonomy in decision-making.
What is being their own boss (or independence)?
Opportunity costs increase along a PPC because of this principle, where specializing in one good means sacrificing more of the other as production shifts.
What is increasing (or bowed-out) opportunity costs?
In the Nissan case study, investing in new factories and worker training shifts the PPC this way by improving these factors (name two: land, labor, or capital).
What is outward (due to better capital and human capital)?