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--1.1.1 ECONOMIC PROBLEM OF SCARCITY--
--1.1.1 ECONOMIC PROBLEM OF SCARCITY--
"SCARCITY refers to the problem that arises when an economy's SCARCE ('LIMITED') PRODUCTIVE RESOURCES are unable to satisfy the UNLIMITED WANTS of its population."
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--1.1.2 CHOICES AT ALL LEVELS--
--1.1.2 CHOICES AT ALL LEVELS--
"...following on from our definition of scarcity, we can see how this situation compels owners of these scarce resources (Private or Public) to make CHOICES about which needs to satisfy, and which needs to forgo."
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--1.1.3 OPPORTUNITY COST--
--1.1.3 OPPORTUNITY COST--
"When these decisions are made, there will inevitably be a choice that is forgone ('given up') at its expense, and this can therefore be considered the cost paid for making a decision."
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"In other words, the cost of choosing to use the scarce resources to satisfy the wants of A is not using the scarce resources to satisfy the wants of B. This cost is referred to as the OPPORTUNITY COST."
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--1.1.4 BASIC ECONOMIC QUESTIONS--
--1.1.4 BASIC ECONOMIC QUESTIONS--
"Whoever manages these resources, from private individuals to a dictator, they all need to find answers to THREE very important questions."
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"WHAT TO PRODUCE?"
"Because we cannot produce everything, we need to decide what to produce and in what quantities. We have to choose, for example, whether to produce lots of goods and services, such as food, clothing, and vehicles, to improve our standard of living, or whether we need to produce lots of military hardware to improve our defenses.
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"HOW TO PRODUCE?"
"This question arises since resources are scarce in relation to unlimited wants; we need to consider how resources are used so that the best outcome arises. We need to consider how we can get the maximum use out of the resources available to us."
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FOR WHOM TO PRODUCE?
FOR WHOM TO PRODUCE?
"Finally, as we cannot satisfy all wants, decisions have to be taken concerning WHOSE WANTS TO SATISFY, and also WHOSE WANTS TO IGNORE."
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--THINK ABOUT IT!--
--THINK ABOUT IT!--
"Think about how the scarce lifejackets and seats on the lifeboats were allocated when the Titanic started to sink, what method was used?", "Who got ignored?"
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"...Can you imagine if it was based on first-come-first-served?" "Who would get their wants satisfied and who would be ignored?"
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"...also can you imagine if it was based on the highest bidder?" "Who would get their wants satisfied and who would be ignored?"
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"Final thought, what method allowed you to be sat in your seat in this school?", "What method do you think is used to get you a seat at Oxford university?"
--TASK--
"Explain this scenario in terms of opportunity cost."
--TASK--
"Read the article below and explain how it illustrates 1.1.1 to 1.1.4."
--THE BIG TASK--
--THE BIG TASK--
"Watch this clip from the movie Castaway and explain how it illustrates the concepts and ideas detailed above."
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"Economics is a social science that studies how individuals, businesses, and governments make decisions about how to allocate scarce resources to satisfy unlimited wants and needs. We can illustrate the fundamental economic problems faced by everyone using the Castaway clip. Firstly, we have an individual who clearly has 'unlimited wants' in terms of food, shelter, and, in this case, the immediate need for hydration via coconut water, however he has limited...."
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