Scarcity and Choices
The problem of unlimited wants and limited resources.
What is scarcity?
The next best alternative given up when making a choice.
What is opportunity cost?
Comparing additional costs and additional benefits.
What is marginal analysis?
Something that encourages or discourages behavior.
What is an incentive?
The right to own and control resources.
What are property rights?
You have $20 but want to buy $50 worth of items. What economic problem do you face?
What is scarcity?
You buy concert tickets instead of new shoes or video games. The shoes were your next best option. What are they?
What is the opportunity cost?
You are deciding whether to study for one more hour. What type of thinking are you using?
What is marginal analysis or thinking?
Workers receive a $1,000 bonus for meeting a goal. What type of incentive is this?
What is a positive incentive?
An economy where consumers and producers make many decisions through buying and selling.
What is a market economy?
Giving up one thing to get another.
What is a trade-off?
Maria attends college instead of taking a $50,000 job. What is her opportunity cost?
What is the value of the job or income she gave up?
A restaurant earns $500 by staying open another hour but spends $300. What should it do?
Stay open, because marginal benefit exceeds marginal cost.
A city raises parking fines to reduce illegal parking. What type of incentive is this?
What is a negative incentive?
Customers buy more electric cars, so companies begin producing more. What is influencing production?
What is consumer demand?
You have two hours to finish homework, exercise, and spend time with friends. What limited resource forces you to choose?
What is time?
You attend a career workshop instead of working a paid shift. What is your opportunity cost?
What is the benefit of working the paid shift?
Another slice of pizza causes more discomfort than enjoyment. What should you do?
Stop, because marginal cost exceeds marginal benefit.
Students receive extra credit for perfect attendance, and attendance increases. What does this show?
What is incentives can influence behavior?
A new restaurant opens nearby. Other restaurants lower prices and improve their food to keep customers. What economic force caused these changes?
What is competition?
A school wants to hire teachers, buy computers, and repair its gym, but cannot afford everything. What must the school do?
What is make choices or prioritize its resources?
You choose college over working full-time or traveling. Is your opportunity cost both options?
No. What is only the next best alternative?
A business already lost $10,000 on a failing project. Should it focus on that money or the costs and benefits of continuing?
The additional costs and benefits of continuing.
Workers are paid based only on how much they produce. Production rises, but quality falls. What does this demonstrate?
What is incentives can create unintended consequences?
A bakery improves its products to earn more profit. Customers get better products and more choices. Which Adam Smith idea does this demonstrate?
What is the invisible hand?