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Needs and Wants
• Anything you need for survival- air, food, water
• An item we desire that is not essential to our survival
Scarcity
• Implies limited quantities of resources to meet unlimited wants
• It will always be this way
Shortage
• A shortage occurs when producers will not or cannot offer goods or services at the current prices
• Temporary or long-term• Wars and droughts can
create them- our water shortage for example
Oil Embargo of 1973-74
• In 1973 Syria and Egypt attack Israel, changing the rules for post-WWII international relations. Because we supported Israel, Opaec placed a ban on us and the Netherlands and later Portugal, South Africa and Rhodesia.
• People had to stand in line for gas-
Factors of Production
• Land- Natural Resources
• Labor- the efforts needed to create anything for which a person gets paid
• Capital- a human- made resource that is used to produce other goods or services
Physical Capital
• Human-made objects used to create other goods and services
• This can be machines or buildings or other tools
Entrepreneur
• People who put the factors for production together
• They develop new ideas and figure out what people want
• You don’t have to develop Microsoft to be an entrepreneur
Trade-offs
• Individuals, businesses, large groups of people and even governments make decisions that force us to give up something in favor of another…..give some examples of individual trade-offs
Opportunity Cost
• When making a decision in a trade-off, the most desirable alternative is usually given up to be responsible, more convenient or helpful.
• For example: You have two options- sleeping in late in the A/M and rushing to school to take a test or waking up early to study before you get to school. Studying in the a/m would improve your grade on the test
Karen’s choice
• Karen had that dilemma. She decided to make a decision making grid. These grids are obviously made for important decisions.
• This called the all or nothing approach