Living in a World of Living in a World of ScarcityScarcity

Consequences of Living in a World Consequences of Living in a World of Limited Resourcesof Limited Resources

We Live in a World of Scarcity

We have unlimited wants, but our resources are limited

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As a result of scarcity, we need to make choices about how we use our limited resources

We Live in a World of Scarcity

Opportunity Cost The most valued

opportunity or alternative we give up when

we make a choiceExample

When I went to the store I saw a blue tie and a red tie

that I wanted to buy. I chose the red tie - so the

opportunity cost of that decision was not having the

blue tie

Consequences of Scarcity - The Need for a Rationing

DeviceBecause of scarcity, a rationing device is needed to determine who gets what portion of all the resources and goods available

In most societies, money is used as a rationing device

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Consequences of Scarcity - Competition

Because people compete for the rationing device, competition is a consequence of scarcity

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In a competitive world some people do very well, others do okay, others do quite poorly