scarcity and wants/needs

Jack Wheatley

Scarcity and Wants/Needs

The fundamental problem of having seemingly unlimited human wants and needs in a world of limited resourcesSociety does not have enough resources to fulfill all human wants and needsE.g. Helium• Often used as cooling agent for nuclear reactors• Only about 30 years of Helium left for use on Earth• Finite element; we will eventually run outNeed to find alternate resources for common wants and needsMost things are finite; we need alternate resources for every time resources come to and end, or an unlimited resource

Scarcity

Something that is necessary for survivalFood, shelter, waterLimited resources (needs)

Something that is desirediPhone, XBOX, Garrett’s cow costumeUnlimited wants

Wants vs. Needs

• Must distinguish wants from needs• What is necessary in today’s society?• Represent overall concept of demand

Visual – Scarcity

Visual – Wants and Needs

Earlier this month, Obamacare website crashedThough the reason was proved not to be by traffic on the website, this is a vague example of scarcity – when a website crashesSo many people want to use a product (website), but there are limited resources (workers keeping it updated), so it crashes.Another example: Everyone wants a new pair of shoes, but there are only limited resources to make the shoes. When they run out of these resources, they can’t make the shoes, and not everyone can have them

Connection – Scarcity

Your annoying group of friends is complaining at a party that the pizza is from Domino’s and not from Pizza HutPizza Hut pizza: WANTPizza (food): NEEDYou need the food in order to live/survive. Pizza from Pizza Hut is just a privilege.Conclusion: Tell your friends to stop complaining about the origin of the pizza, and just be grateful to have the pizza.

Connection – Wants vs. Needs

GDPBy: Samson Tessema

DefinitionGDP(Gross Domestic Product) – the market value of all officially recognized final goods and services produced within a country in a given period of time

Explain Term/ConceptIt is used to show how well a country’s economy is doing

The total number of goods and services produced over a specific period of time

Visual‘Murica

Connection

GDP=AEWAEW=Average Economic Wealth

Stock Market/Dow Jones industrial average

Kj McBride

Definitions

Stock market – a stock exchange

Dow Jones Industrial average – an indicator of stock market prices; based on the share values of 30 blue-chip stocks listed on the New York Stock Exchange

Stock market

• When a company is in need of money they can sell part ownership in the company with a claim

• As the company’s funds increase the claim you have with the company increases too

• If the company’s funds decrease so does the claim

Dow Jones Industrial Average

• The overall indicator of the condition of the stock market

• It is based on 30 stocks selected by editors of the wall street journal

• They are the 30 most actively traded stocks on the market

Visual

connection

We are using the stock market in classItIs

Fun

Microeconomics• the branch of economics

dealing with particular aspects of an economy, as the price-cost relationship of a firm

Macroeconomics• the branch of economics

dealing with the broad and general aspects of an economy, as the relationship between the income and investments of a country as a whole

Microeconomics

• analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions effect others

Macroeconomics

• examines the economy as a whole and answers questions such as 'What causes the economy to grow over time?

How can you remember?

• Micro means small and it is the analysis of individuals and small groups

• Macro means large and it examines the whole economy

Corporation

Company or group of people authorized to act as a single entity (legally a person) and

recognized as such by law

What is a Corporation?• Created by a group of shareholders who own corporation

– Shareholders represented by holding of common stock.• Shareholders elect a board of directors (one vote per

share) who appoint and oversee management of the corporation.

• Majority of corporations are setup with the goal of providing a return for its shareholders– Some are nonprofit

• When you purchase stock you are becoming part owner in a corporation.

Connection

Common Stock

Shares entitling their holder to dividends that vary in amount and may even be missed

depending on the company’s future

What is Common Stock?

Connection

Preferred Stock

Stock that entitles the holder to a fixed dividend, whose payment takes priority over that of

common stock dividends

What is Preferred Stock?

• Class of ownership with higher claim on earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common

• Shares usually do not have voting rights.• Details of structure specific to individual

corporations • Also known as "preferred shares".• Negatives: no voting, less appreciation

Connection

Wouldn’t you much rather prefer having money first rather than later?

Free Market EconomyJOSH SHIKOFF

Definition

A free market economy is an economy in which decisions regarding investment, production and distribution are based on supply and demand, and prices of goods and services are determined in a free price system (economic system where prices are set by the interchange of supply and demand)

Simply…

That means people can freely buy and trade goods and services. The price of each good or service is determined not by the government but by demand. Demand is a measure of how many people want to buy a particular good or service.

Visual

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Real Life Example Ebay is an example of a Free Market Economy because the

people control the market by making their own prices. The price posted is dependent on the supply and demand of the product. For example, if someone posts a Honus Wagner card it will sell for more since not many people are selling them and there is a high demand. One the other hand, a normal Ryan Howard card will have less demand therefore it will have a greater supply that sells for cheaper.

FACTORS OF PRODUCTION

By: Garrett Cantor

Definition The inputs that are used in production of

goods or services in the attempt to make a profit – Investopedia

Inputs are everything used from beginning of production to end

Examples Land – Naturally occurring goods Labor – Effort put into production (mostly

human) (Intellectual, social) Capital – Human made goods used in

production Subject of Labor – objects transformed by

labor

Visual

Connection

Factor x Factor = Product

Capitalism Capitalism is an economic and political system in which a country’s trade and

industry are controlled by private owners for profit, rather than by the state.

By: A.J. Drobot

Explaining Capitalism in Understandable Terms

• Economic system based on private ownership on the means of production and capital goods. (Durable good used in production)

• The parties usually determine the prices at which assets, goods, and services are exchanged.

• There are three types of capitalism; Laissez-faire Capitalism, Welfare Capitalism, and State Capitalism.

• Capitalism is defined as a social and economic system in which capital assets are mainly owned and controlled by private persons.

• Labor is purchased for money wages, and the capital gains accrue to private owners, and the price mechanism is utilized to allocate capital goods between uses.

ConnectionPractically everything in your life

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Supply and Demand

By: Jack Brown

Definition

In microeconomics, supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium for price and quantity.

Definition Simplified

The higher the quantity of a certain good is, the lower the cost. The lower the quantity of a certain good is, the higher the cost.

Concept

If Juanita has 1 apple, she might sell it for 5$ because she only has one.

If Jibbly has 5 apples, he might sell them for 3$ each because he has more of them

Visual

Connection

/l\ l/ l \ l l Quantity $$$ l l \ l / l \l/

Jack Wheatley

Scarcity and Wants/Needs

The fundamental problem of having seemingly unlimited human wants and needs in a world of limited resourcesSociety does not have enough resources to fulfill all human wants and needsE.g. Helium• Often used as cooling agent for nuclear reactors• Only about 30 years of Helium left for use on Earth• Finite element; we will eventually run outNeed to find alternate resources for common wants and needsMost things are finite; we need alternate resources for every time resources come to an end, or an unlimited resource

Scarcity

NEED:Something that is necessary for survivalFood, shelter, waterLimited resources (needs)

WANT:Something that is desirediPhone, XBOX, Garrett’s cow costumeUnlimited wants

Wants vs. Needs

• Must distinguish wants from needs• What is necessary in today’s society?• Represent overall concept of demand

Visual – Scarcity

Visual – Wants and Needs

Earlier this month, Obamacare website crashedThough the reason was proved not to be by traffic on the website, this is a vague example of scarcity – when a website crashesSo many people want to use a product (website), but there are limited resources (workers keeping it updated), so it crashes.Another example: Everyone wants a new pair of shoes, but there are only limited resources to make the shoes. When they run out of these resources, they can’t make the shoes, and not everyone can have them

Connection – Scarcity

Your annoying group of friends is complaining at a party that the pizza is from Domino’s and not from Pizza HutPizza Hut pizza: WANTPizza (food): NEEDYou need the food in order to live/survive. Pizza from Pizza Hut is just a privilege.Conclusion: Tell your friends to stop complaining about the origin of the pizza, and just be grateful to have the pizza.

Connection – Wants vs. Needs

DI$POSABLE INCOME

Miriam van der Spek

DEFINITION• The part of a persons income remaining after

deducting personal income taxes.Or• The portion of an individual’s income over

which the recipient has complete discretion.

Explanation:• Disposable income is the money that a person has

from their paycheck (after indirect taxes), investments, etc.

• Unfortunately, there are required payments to be paid, as well as those which we choose to pay for.

• Required payments are things like taxes.• “Other” payments are things like Netflix.• Sometimes disposable income goes to those payments

that seem to fit in both categories, such as electric or heating bills.

Visual

YOU

paycheck

Before indirect taxes After indirect taxes

Obligatory payments

Voluntary payments

YOU

Connection

• Disposable Income: The income you can throw away to where you want

YOU

BILLS