SSEF1 Explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments.

• ​A. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.

• ​B. Define and give examples of productive resources (i.e. factors of production): natural resources (i.e. land), human resources (i.e. labor and human capital), physical capital and entrepreneurship

• ​C. Explain the motivations that influence entrepreneurs to take risks (e.g., profit, job creation, innovation, and improving society).

• ​D. Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity by making choices.

​

​

Scarcity

​What is scarcity?

• ​a basic condition that exists when unlimited wants exceed limited productive resources

• ​in order for something to be considered a scarce item, it must be limited in supply AND desirable

​Why do we have scarcity

​Simply put, we lack the ability to get everything we want because resources are scarce!

​

​Because EVERYTHING is scarce, we are forced to make decisions. This includes:

• Do you go to work on Friday, or do you go on a date?

• ​Should you go to prom with JuJu or SuSu?

• ​At lunch, will you get the Smucker Uncrustable or the pizza?

• ​Are you going to go to college at GSU or out of state?

​

​You are forced to decide one or the other because of scarcity!

​Productive Resources

​What are productive resources?

• ​all of the scarce items used in the production of goods and services in the economy

• ​there are four types of productive resources:

  • ​Natural Resources

  • ​Human Resources

  • ​Capital Resources

  • ​Entrepreneurship

​Natural Resources

• ​"Gifts of nature"

• ​comes from the Earth

• ​humans are unable to produce these resources on their own

• ​only the "natural" form of the object...trees in the production of paper would be an example, but the paper would NOT be a natural resource if you used it for a menu at your restaurant

​Human Resources

​

​Capital Resources

​

​Entrepreneurship

​

​Opportunity Cost

​

​Motivation for Entrepreneurs

​

​SSEF2 Give examples of how rational decision making entails comparing the marginal benefits and the marginal costs of an action.

• ​A. Define marginal cost and marginal benefit.

• B. ​Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs.

• ​C. Explain that people, businesses, and governments respond to positive and negative incentives in predictable ways.