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Essential Question:Essential Question:Define the term scarcity and explain what it

forces us to do, Identify the 3 basic economic questions, explain the difference between productivity and efficiency, Why should a producer pay attention to P+E?

Scarcity and ChoiceScarcity and ChoiceSECTION 2

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What is Scarcity?What is Scarcity? Scarcity is most basic problem in Economics. It is the combination of two important facts

There is a limited supply of resources There is unlimited demand for these resources

by the different societies of the worldSince scarcity is a fact, it forces us to make

choices about how we use resources

Scarcity and ChoiceScarcity and ChoiceSECTION 2

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Three Basic Economic QuestionsThree Basic Economic Questionswhat to produce- this needs to be answered

based on what resources you have -everyone’s need should be considered

how to produce- are there ways to produce that use resources more efficiently?

for whom to produce- who will get the finished product?

Scarcity and ChoiceScarcity and ChoiceSECTION 2

Productivity vs. EfficiencyProductivity vs. EfficiencyProductivity is the measure of how much output you get (product) based on how much input you use (resource). If you add more resources (input) productivity (output) SHOULD increase

Efficiency means getting the greatest amount of output using the least amount of input

Scarcity and ChoiceScarcity and ChoiceSECTION 2

Henry Ford and the Assembly LineHenry Ford and the Assembly Linehttps://www.youtube.com/watch?v=thQfzzMnU3U

Scarcity and ChoiceScarcity and ChoiceSECTION 2

Why do producers study Why do producers study productivity/Efficiencyproductivity/Efficiency??

Producers have to PAY for the resources that they consume

They do this to make products that they can sell

Producers never want to spend more on resources than they will get in return when they sell their productsLow Productivity = Lack of Efficiency = Waste!!!

Scarcity and ChoiceScarcity and ChoiceSECTION 2