Today we will learn about the concept of scarcity, the idea that societies and people have a limited ability to produce the things we want but an unlimited desire to consume those things. I will introduce the production possibilities model as our theoretical framework for this. You should have read the text chapter identified below in the homework section and watched the related videos. We will start class today with you working cooperatively with a partner to find a solution to the "Problem of the Day" and then there will be a lecture on our next topic. This page contains all the information you need for today's class: homework, the problem of the day, helpful resources (videos, podcasts, etc.) and an explanation of the activities we will do in class. Use the table of contents on the right to help you navigate.
Read Mankiw (Chapters 2 and 3) and watch the following videos.
Khan Academy Videos
Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt. Since this is your first one, it will only count as practice. Do your best to respond to these by using what you learned from the textbook chapter.
Classify each of the of the following statements as positive or normative and explain.
Society faces a short-run trade-off between inflation and unemployment.
A reduction in the rate of money growth will reduce the rate of inflation.
The central bank should reduce the rate of money growth.
Society ought to require welfare recipients to look for jobs.
Lower tax rates encourage more work and more saving
Lecture: Scarcity, opportunity cost and the production possibilities model
Ted Talks
Irrational Behavior: Dan Ariely asks, Are we in control of our decisions?
Related Readings