Economic Decision Making

Chapter 2

Why is What We Want Scarce?

• Wants are unlimited / Means to acquire them are not

Scarcity is Everywhere

• How can goods be scarce is everyone has them?

• Surely there are enough providers of services, so how can those be scarce?

• They are scarce because the resources to produce them are scarce.– What if everyone were rich?

What is the Difference

• Scarcity v. Shortage– RLE – Hurricane Katrina– RLE…..

How Do We Satisfy Our Wants

• Factors of Production:– 1.– 2.– 3.

• Inputs / Outputs

• Production Equation:– L + L + C = G & S

• And sometimes Y: Entrepreneurship

“Gifts of Nature”

• What is “land” besides real estate?

• Perpetual Resources, the gifts that keep on giving.– Renewable / Nonrenewable

• What is the value of a resource tied to?

Human Capital / Labor Resources

• What is labor?– Population / Willingness To Work– Human Capital – quality of work

• RLE – – The contrast of wealthy and poor countries – book

example of Japan and Nigeria