Chap001 - 1 1-1 C1 : Central Problem of Scarcity Wants...

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Unformatted text preview: 1 1-1 C1 : Central Problem of Scarcity Wants & desires continue to grow: Newest camera phone Larger TV Bigger home More exotic vacation Why can’t we have everything we want? Our wants > our resources. LO-1 2 1-2 Economics & Opportunity Cost Economics: study of how best to allocate scarce resources among competing uses Opportunity Cost: most desired goods & services that are foregone in order to obtain something else. next best alternative that you give up. LO-2 3 1-3 Factors of Production Resource inputs used to produce goods & services 4 resources: Land, labor, capital, & entrepreneurship. LO-2 4 1-4 Scarcity Central problem of economics Lack of available resources to satisfy all desired uses of those resources. LO-1 5 1-5 3 Basic Economic Questions WHAT to produce HOW to produce FOR WHOM to produce LO-3 6 1-6 WHAT to Produce Our wants > our resources We have to decide what we want most We have to sacrifice less desired activities & goods. LO-3 7 1-7 Production Possibilities How much we could produce depends on how many resources are available: Land – including natural resources Labor – number & skills of workers Capital – machinery, buildings, networks Entrepreneurship – skill in creating products, services, & processes LO-3 8 1-8 Production Possibilities Production possibilities – alternative combinations of goods & services that could be produced in a given time period with all available resources & technology. LO-3 9 1-9 Choices Nations Make nation must choose what to do with its scarce resources during war or periods of military buildup Produce military goods (“guns”) or consumer goods (“butter”)?...
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This note was uploaded on 09/04/2011 for the course PAS 2201 taught by Professor Dhing during the Spring '07 term at St. Johns Duplicate.

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Chap001 - 1 1-1 C1 : Central Problem of Scarcity Wants...

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