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Scarcity and the Study of Economics FYI We witness scarcity with each year’s “hot” new toy. Inspired by hunter President Teddy Roosevelt, Americans coveted the teddy bear in 1906. Cabbage Patch dolls were big during the 1980s, as were Tickle Me Elmos in 1996. By 1999 Game Boy’s Pokémon was the rage with a 10-cent trading card. The most-prized first-edition pocket monsters were in such short supply that they commanded from $8 to $182. The Fundamental Economic Problem Scarcity is the condition where unlimited human wants face limited resources. Economics is the study of how people satisfy wants with scarce resources. Needs are required for survival; wants are desired for satisfaction. http://www.mcwdn.org/ECONOMICS/Need Want.html TINSTAAFL Someone has to pay for production costs, so There Is No Such Thing As A Free Lunch. Question Why do you think scarcity is an issue with the rich as well as the poor? It is a human trait that few people, regardless of their economic status, are satisfied with what they have. Three Basic Questions 1. What must we produce? 2. How should we produce it? 3. For whom should we produce? The Factors of Production Factors of production are resources necessary to produce what people want or need. 1. Land is the society’s limited natural resources. 2. Capital is the means by which something is produced such as money, tools, equipment, machinery, and factories. 3. Labor is the workers who apply their efforts, abilities, and skills to production. 4. Entrepreneurs are risk-takers who combine the land, labor, and capital into new products. Why are entrepreneurs an economy’s driving force? Their abilities to start new businesses and introduce new products may re- energize a sluggish economy or strengthen a successful economy.
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