Module-1
S carcity :
The Desire for things is greater
Than is freely available
TEACHER’S GUIDE
P. 3
P. 6
P. 6
P. 7
P. 9
P. 11
P. 12
P. 15
P. 31
Defined
Content standards
Materials
Procedure
Lesson outline
Closure
Assessment
Overheads
2Answer key
Visuals N
Visuals for overhead projector.
Copy to transparent paper for overhead.
P. 16
P. 17
P. 18
P. 19
P. 20
P. 21
P. 22
NVisual-1: Scarcity defined
NVisual-2A: Desires
NVisual-2B: Desires list
NVisual-2C: Desires
NVisual-3: Choices
NVisual-4: Rationing
NVisual-5: Production possibilities frontier
Lessons 2
Copy and handout to students.
P. 24
P. 26
P. 28
P. 29
2Lesson-II: Vegan or meat eater
2Lesson-IIIA: The gift of life
2Lesson-IIIB: LifeSharers brochure
2Lesson assessment
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
DEFINED
H
ave you ever wondered why diamonds, luxury items, are so expensive, while water, a necessity of life, is relatively cheap? The
answer is scarcity. There are not enough diamonds in the world to satisfy
the desire for them, yet there is an abundance of water. While it costs
only a couple of dollars to buy a 20 ounce bottle of water (and that’s
very expensive water), a 20 ounce bottle of diamonds could run into
millions of dollars.
Scarcity is the term economists use to describe the phenomenon
that people want more of a commodity than is freely available. Commodities include the physical goods (automobiles, houses, and handbags) and services (haircuts, airplane rides, and lawn mowing) that
households buy. Commodities also include resources such as people’s
work effort, raw materials, and the land that is used to produce the
household products.
Some things are not scarce; there is as much of the commodity as
we would like freely available to us. Air and seawater are two common
examples. Think about sitting in the teacher’s lounge. You can breathe
as much air as you like and there is still more air for others to use. In
this context, air is not scarce and, from an economist’s perspective, it
is free (that is, its opportunity cost is zero).
Competing uses may change that situation. As you relax in the
teacher’s lounge, imagine another faculty member entering with a lit
cigarette. Suddenly that clean air you were breathing is not so clean
anymore. While the air remains free, clean air has become scarce.
The air now has two uses; for breathing and for waste disposal of tobacco smoke. Clean air in the teacher’s lounge has become a scarce
resource.
There will always be scarcity. Scarcity cannot be eliminated. Eliminating scarcity defies nature because there is a limit to the natural resources available to us. If there were no limits and no scarcity, we could
all fully satisfy all of our desires for goods, services, and resources.
Think for a moment about the decision to produce goods and services. Imagine you own ten acres of productive land. You can grow
vegetables on your land or you can raise cattle. In fact, you can do
some of both, but in order to grow more vegetables you must give up
raising some cattle. Let’s assume you can grow 50 bushels of vegetables
per acre or one cow per acre. This means that on your ten acre plot
you can grow up to 500 bushels of vegetables or raise as many as ten
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
3
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
Figure 1
cows. You cannot, however, grow 500 bushels of vegetables and ten
cows. Remember scarcity. Your land, time, and other inputs required
to produce vegetables and cows are scarce. If you start by producing
ten cows, you must give up some cows to produce more vegetables.
Another way to think about this is shown in the diagram above, which
shows the production possibilities using the given resources.
In the graph the line AE shows the maximum amount that can
be produced if all resources are used efficiently. Goods may also be
produced in quantities below the line at a point like F. In this case,
not all resources are being fully utilized. Alternatively, there are not
enough resources available to produce beyond the line AE. If you are
a vegan and do not consume animal products you may prefer to produce all vegetables (500 bushels) and no cows, point A. If, however,
you would like to produce some cows for milk and dairy products,
you may produce at a point like B. To get to point B from point A,
where you produce some cattle, you must give up some vegetable
4
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
Module-1
Teacher
The desire for things is greater
than is freely available
production. Alternatively, if you are a big meat eater and you want
to produce a lot of cows, you are going to have to give up producing
even more vegetables to reach a point like D. Line AE is the Production possibilities frontier. Production possibilities frontier identifies
the combinations of commodities that may be produced from scarce
resources. Movement along the production possibilities illustrates a
trade off between commodities. A trade off is necessary because the
resources to produce these commodities are scarce.
Because resources are scarce, we must make a trade off. To produce
some cows with your limited resources you must give up the production of some vegetables.
Scarcity constrains us from having all that we desire. We have to
make choices among available alternatives. At the very least, time is
scarce for all of us. Each of us must decide what we are going to do each
day and night. Should I go to the mall tonight, stay home and study,
or meet with a youth group? Income is limited. Should I spend my ten
dollar allowance on a new shirt or pizza and a movie? Resources are
scarce. Should I use my last cup of milk for my cereal or to bake a cake?
Scarcity forces us to make a trade off between alternatives. We must
decide how to use our income, our time, and our other resources. We
must choose which desires to meet.
Scarcity makes decisions about the allocation of resources important. If there are 40 students and 20 hamburgers, how do we decide
who gets a hamburger? The answer is that in a market economy, we tend
to allocate commodities through price. We use currency, or dollars, to
determine who gets things. In our choice to purchase one item we are
also deciding how many other goods and services we are willing to
give up to obtain it.
All things are not rationed through the use of currency. Goods rationed on a first-come basis will go to those that are first to get into
line and are willing to wait in line. University enrollment is often allocated to those with the highest grades or best test scores. In command and control economies, production decisions are made by the
central government’s planning authority.
Scarcity is the reason why economic decisions have to be made.
Economic decisions are those choices we must make between alternatives. We make choices to determine how to use resources for production and to decide which goods and services to consume. Without
scarcity there would be no choices, we could have it all.
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
5
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
CONCEPTS
1.
2.
3.
4.
Scarcity
Trade off
Production possibilities frontier
Rationing
OBJECTIVES
1. Understand the meaning of scarcity.
2. Identify why things are scarce.
3. Understand the consequences of scarcity.
CONTENT STANDARDS
National Content Standards in Economics
1. (Standard-1) Productive resources are limited. Therefore, people
cannot have all the goods and services they want; as a result, they
must choose some things and give up others.
2. (Standard-3) Different methods can be used to allocate different
kinds of goods and services.
Montana Social Studies Content (Standard-5)
1. (Benchmark-1) Identify and explain basic economic concepts. Analyze the impact of scarcity.
TIME REQUIRED
1-3 class periods
Materials Needed
Overhead projector
Transparency pen
Visuals for overhead projector: Copy to transparency.
NVisual-1: Scarcity defined
NVisual-2A: Desires
6
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
NVisual-2B: Desires list
NVisual-2C: Desires
NVisual-3: Choices
NVisual-4: Rationing
NVisual-5: Production possibilities frontier
Lesson worksheets: Copy for each student.
2Concepts defined
2Lesson-II: Vegan or meat eater
2Lesson-IIIA: The gift of life
2Lesson-IIIB: LifeSharers brochure
2Lesson assessment
PROCEDURE
1. Explain to students that this lesson will focus on scarcity. Nearly everything around us is scarce; if it were free, we would desire more
than what is available.
2. Display NVisual-1: Scarcity defined. Point out different items around
the room that are scarce. This would include nearly any item in the
room, for example, paper and pencils are scarce because there is a
limited supply of wood and labor to produce them; desks and tables,
they are needed in other rooms; even class periods, there is limited
time in the day and only a few teachers to teach them.
3. Brainstorm with students to find any items that may not be scarce, but
are instead abundant. One thing in the room that is abundant is air.
4. Display NVisual-2A: Desires. Give students five minutes to write a
list of their ten greatest desires.
LQuestion: What things do they want more than anything else in
the world?
Discuss these desires with the class and write some of the more popular and outlandish on the board or on the NVisual-2B: Desires list.
Student lists may include consumption items like cars, games, and
computers (scarcity of resources). They may include getting better
grades or traveling to exotic places (scarcity of time). Or they might
even consider more grandiose ideas such as eliminating poverty
(scarcity of time and resources).
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Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
5. Display NVisual-2C: Desires.
LQuestion: Ask the students: Why don’t you have it all?
LQuestion: Why have they not obtained or achieved everything
on their list?
Answer: Help them realize that even as billionaires they would
not be able to satisfy all of their desires.
Keep in mind that time is a scarce resource that may prevent us
from meeting our desires. And wealth is more than just income, it
includes our perception of our own well-being.
6.
Discuss the things that are scarce at your school.
LQuestion: Is there a computer for everyone?
LQuestion: Is there plenty of parking?
LQuestion: Are there lots of fields?
LQuestion: Does the cafeteria satisfy everyone’s culinary desires?
LQuestion: If the school received a million dollar grant could it
obtain all of the things that everyone desired?
LQuestion: Why not?
7. Display NVisual-3: Choices. Introduce the idea of choices or a
trade off. Even with extended financial resources your school must
choose between alternatives.
LQuestion: Is it more important to have more parking or more
fields?
LQuestion: Is there enough land?
LQuestion: If there were a computer for everyone, where would
they go?
8. Have the students discuss the concept of a trade off.
LQuestion: What are they doing tonight?
LQuestion: What else would they like to do? Tell the students you
will be giving them an exam tomorrow that is worth 50 percent of
their grade. Ask if this will change their evening plans.
Answer: Point out to the students that incentives can modify
behavior.
9. Display NVisual-4: Rationing. Discuss the concepts of allocation
and rationing. When something is scarce it must be decided who
will receive it and who will not. There is not enough for everyone
8
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
to have as much as they want for free.
10.Tell the students that you are going to give away one homework
pass valid for a free A on any homework assignment this semester
(this could also be a hall pass, candy bar, or another commodity
valued by the students). Put the students in groups of three to five
and let them decide how to allocate the commodity.
11.Discuss the allocation methods derived. Write the most popular
methods on the board.
LQuestion: Are their allocation methods equitable?
LQuestion: Do they provide the commodity to those most in need
of it or to those who desire it most?
Follow through and give them the commodity promised, allocated
as they determined.
Lesson outline
Lesson-I: Alchemy only works with pencils
Materials:
Pencils
Share with your students an imaginary world where all the pencils
in the world are made of gold. Have students hold up their pencils and
think about how much wealth has been created in the classroom.
LQuestion: Has gold become more or less scarce?
Answer: If all the pencils in the world were made of gold more gold
would be available and gold would be less scarce.
LQuestion: If gold is less scarce (more abundant), is it more or less
valuable?
Answer: Because gold is more abundant, it is less valuable, there is
more of it to go around, this is different than if only the pencils in the
classroom were made of gold.
LQuestion: Why the value of pencils in the room would be different if
only the pencils in the room were transferred into gold.
Answer: If only the pencils in classroom were changed to gold the
wealth of individuals in the class would increase without having a sig-
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
9
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
nificant affect on the overall supply of gold.
Lesson-II: Vegan or meat eater
Materials:
N Visual-5: Production possibilities frontier
2 Lesson-II: Vegan or meat eater
The production possibilities frontier provides a great visual to help
understand the concept of a trade off resulting from scarcity. It is also a
good introduction to a concept that will be discussed in more technical
detail in future modules. It is highly recommended that you present this
lesson in class. Display N Visual-5: Production possibilities frontier
and discuss the idea of a trade off with the students. This is the same
example provided in the scarcity defined section above. Recall, you
have ten acres to grow vegetables and cattle. You can grow 50 bushels
of vegetables per acre or one cow per acre. Hence, you can grow a
maximum of 500 bushels of vegetables and no cows or ten cows and
no vegetables. To produce some of both you must give up some of the
other because resources (time, land, and other inputs) are scarce.
Handout 2Lesson-II: Vegan or meat eater-A. Allowing students to
work with their neighbors have them answer the questions. Their answers will vary depending upon the production point chosen. Close the
lesson by discussing a trade off. Some students may grow no vegetables
(point E), others may raise no cows (point A). Some may have decided to
grow all of one product and trade with others. This is the direction future
modules will take us. Focus on the concept of a trade off. To produce
more of one thing we must give up something else. There is a cost to
every choice we make. Collect the lessons or have students hold onto
them, because they will be used again in Module-2.
Lesson-III: The gift of life
Materials:
2Lesson-IIIA: The gift of life
2Lesson-IIIB: LifeSharers brochure
In the United States today, nearly 90,000 people are waiting for an
organ transplant. Another 40,000 will join the wait list this year. Half
10
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
of those waiting will die before they receive an organ. The problem is
one of scarcity. The desire for organs is greater than the number that
are available. Discuss the idea of organ donation with your class:
LQuestion: Have students think about why there is a shortage of
organ donors?
LQuestion: Ask: How many students in the class would be willing to
donate their organs or those of a loved one in the event of an unfortunate death?
LQuestion: Ask how many are currently signed up as organ donors?
Divide the students into groups of three to five and have them develop policy alternatives to increase the supply of organ donations.
Have them think about how organs are rationed and what is ethically
acceptable. Independently have students read the 2Lesson-IIIA: The gift
of life. When they are finished provide them more time for small group
discussion. After a few moments give them a copy of 2Lesson-IIIB:
LifeSharers brochure. Give them a few more minutes to discuss their
Policy options. Have one member of each group write their first policy
alternative on the board. Remind them that scarcity is forever present
and incentives matter.
Closure
Lesson review:
1. LQuestion: What is scarcity?
Answer: The desire for things is greater than is freely
available.
2. Display NVisual-1: Scarcity defined. Review the definition.
3. LQuestion: Why are things scarce?
Answer: Nature does not provide enough of everything to satisfy
all human desires.
4. LQuestion: What is not scarce?
Answer: Air and seawater are not scarce. Dust (unless it has an
alternative use) is not scarce.
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
11
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
5. LQuestion: Why do we make a trade off?
Answer: Scarcity forces us to make a trade off. Because resources
are scarce we cannot have as much of everything as we would like.
As a result, we must decide which desire we are going to meet and
which we are not.
6. LQuestion: Is it necessary to allocate resources?
Answer: Yes, if they are scarce. If there were no “governed” allocation of resources it may come down to a physical battle. The
resources would be allocated to those with the greatest brut force.
As long as resources are limited and scarce, we cannot all freely have
as much as we would like.
7. LQuestion: When things become more scarce, do they become
more or less valuable?
Answer: More valuable. As there is less of something available (or
the demand for it becomes greater with no change in availability) those
with the greatest desire for it will be willing to give up more to obtain
it.
ASSESSMENT
Multiple-choice questions
1.LQuestion: Which of the following is not scarce?
a.Sugar
b. Milk
c.Seawater
d. Time
2. LQuestion: Things are scarce because:
a. Government rationing prevents us from having all we desire.
b. Our desire for things is greater than the amount that is freely
available.
c. Individuals are greedy and will consume everything they obtain.
d. There is an allocation and distribution problem.
3. LQuestion: Why are many resources allocated through markets?
12
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
a.Because there are not enough resources to satisfy everyone’s
desires.
b.Because greedy people don’t leave enough for others.
c.Because price is the best determinant of individual wealth.
d.Because resources are so abundant price can help us choose
amongst them.
4. LQuestion: How do you know when a good is abundant, or not
scarce?
a.It is freely available.
b.The price is low.
c.The price is high relative to similar goods.
d.It is unavailable.
5. LQuestion: What happens to price when a good becomes more
scarce?
a.Price will decrease.
b.Price will remain constant.
c.Price will increase.
d.There is not enough information to answer this question.
Answers:
1.
2.
3.
4.
5.
c
b
a
a
c
Discussion/Essay Questions
1. LQuestion: Will we ever live in a world without scarcity? Explain.
Answer: No. Scarcity is forever present. The human desire for
goods and services is virtually unlimited but resources are limited.
Hence, our ability to produce the goods and services is also limited.
Technology, however, has enabled us to produce more goods and
services using fewer resources. Even so, the desire for goods and
services still far outstrips our ability to produce them. Technology
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
13
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
has reduced scarcity and improved life quality through more convenient transportation, improved food and health care, and increased
recreational opportunity, etc.
2. LQuestion: Describe how human desires would be met with no
scarcity.
Answer: Everybody could have everything they desire at no cost.
Everything would be abundant, hence, there would be no need to
ration or allocate resources, goods, and services.
3. LQuestion: If price is used to ration sugar, describe what happens
to the price of sugar as more sugarcane is grown and produced by
farmers.
Answer: As sugar becomes more abundant (less scarce) price will
decline. There is more available to those who desire it.
NOTES
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Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
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Module-1
O ve r h e a d
v isu a ls
Scarcity
Scarcity
The desire for things is greater
Module-1
Visual
than is freely available
Visual-1: Scarcity Defined
Scarcity:
The desire for things Is
greater than What is freely
available
N16
Scarcity
The desire for things is greater
Module-1
Visual
than is freely available
Visual-2A: Desires
do you want More than anything
In the world?
Make a list of your Ten
greatest
Desires
N17
Scarcity
Module-1
Visual
Visual-2B: Desires list
N18
The desire for things is greater
than is freely available
Scarcity
Module-1
Visual
The desire for things is greater
than is freely available
Visual-2C: Desires
N19
Scarcity
The desire for things is greater
Module-1
Visual
than is freely available
Visual-3: Choices
forces us to Choose
among Alternatives
a Trade off must be made
N20
Scarcity
Module-1
Visual
The desire for things is greater
than is freely available
Visual-4: Rationing
forces us to allocate
goods and Services
N21
Scarcity
Module-1
Visual
Visual-5: Production possibilities frontier
N22
The desire for things is greater
than is freely available
Module-1
L e sso n
w ork s h e e t s
Scarcity
Scarcity
The desire for things is greater
Module-1
Lesson
than is freely available
Lesson-II: Vegan or meat eater:
What Will You Grow on Your Farm?
I
magine you own ten acres of productive land.
You can grow vegetables on your land, you
can raise cattle, or you can grow some vegetables and some cattle. These are the only choices
available to you. You want to produce as much
as possible.
Assume you can grow 50 bushels of vegetables per acre or raise one cow per acre. This is
given and will not change through the exercise.
Because resources (land, time, and other inputs)
are scarce you must give up producing some of
24 2
one thing to grow more of the other.
On your ten acre plot you can grow up to
500 bushels of vegetables (50 bushels per acre
times ten acres) or raise as many as ten cows
(one cow per acre times ten acres). You cannot, however, grow 500 bushels of vegetables
and ten cows. Remember scarcity. If you start
by producing ten cows, you must give up some
cows to produce more vegetables. Another way
to think about this is shown on the production
possibilities frontier.
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
Module-1
Lesson
The desire for things is greater
than is freely available
Lesson-II: Vegan or meat eater:
Questions:
Pick a point below (A, B, C, D, or E) where you would like to produce and circle it. Answer the
following questions relating to that point.
1. LQuestion: How many bushels of vegetables do you produce?
2. LQuestion: How many cows did you give up to produce vegetables?
3. LQuestion: How many cows did you produce?
4. LQuestion: How many bushels of vegetables did you give up to produce cows?
5. LQuestion: How many bushels of vegetables must you give up to produce one more cow?
6. LQuestion: How many cows must you give up to produce 50 bushels of vegetables?
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
225
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The desire for things is greater
Module-1
Lesson
than is freely available
Lesson-IIIA: The gift of life
The gift of Life
A
medically invented, artificial scarcity in
human organs for transplantation has generated a kind of panic and a desperate international search for them and for new surgical possibilities. Bearing many similarities to the international market in adoption, those looking for
transplant organs are so single minded in their
quest that they are
sometimes willing
to put aside questions about how
the organ [or ‘the
baby’ in the case of
adoption] was obtained.
In both instances the language of “gifts”,
“donations”, “ heroic rescues” and “saving
lives” masks the extent to which ethically dubious and even illegal practices are used to
obtain the desired “ scarce” commodity, infant
or kidney, for which foreigners (or “better off”
nationals) are willing to pay what to ordinary
people seems a king’s ransom. With desperation
built in on both sides of the equation—deathly
ill “buyers” and desperately needy “sellers”—
once seemingly “timeless” religious beliefs
in the sanctity of the body and proscriptions
against body mutilation have collapsed over
night in some parts of the third world under the
weight of these new market’s demands.
—Nancy Scheper-Hughes
individuals from receiving organ replacements
that could either save a life or substantially improve the recipient’s quality of life.
In the United States, all states have enacted
a variation of the Uniform Anatomical Gift Act
of 1968. Under this law, individuals are able to
specify that some or all of their body may be donated after their death. The original version of this
Act neither allowed, nor prohibited, the sale of
human organs. The revised Uniform Anatomical
Gift Act of 1987, however, prohibited the sale
of human organs.
Restrictions on the sale of human organs
in the United States came about as a result of
markets that appeared in the early 1980s for
kidneys that were harvested from living donors
in return for a fee. Kidneys were sold primarily
by the very poorest members of society. The
Advances in medical treatments have resulted in a dramatic increase in the number of
organ transplants performed each year. A limited supply of organs, however, prevents many
26 2
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Scarcity
Module-1
Lesson
The desire for things is greater
than is freely available
Lesson-IIIA: The gift of life
National Organ Transplant Act of 1984 prohibited payments to those who provided organs
for transplantation. While this Act was primarily designed to prevent the sale of organs from
living donors, it also prevented the possibility
of individuals selling the right to harvest their
organs after their death. (The sale of replenishable tissue, such as blood, hair, and sperm,
however, is allowed.)
While donors cannot legally be paid for
providing organs, there is a very active market
for human organs. Organ procurement organizations, operating as local monopolies, collect
organs from voluntary donors and then provide
them to hospitals that provide transplants. While
the National Organ Transplant Act prohibits
payments to patients, it allows organ procurement agencies to receive a fee for the removal
and transportation of organs.
Opponents of market-based allocation systems argue that individual income and wealth
would determine who receives and who supplies organs. They argue that decisions concerning who should receive a transplant should
be based upon medical criteria rather than on
income and wealth.
Supporters of a market for human organs
argue that the chronic shortage of organs for
transplant could be reduced or eliminated if
donors (or their survivors) were paid for the
use of their organs. One popular suggestion
is the use of a futures contract in which an
individual sells the right to harvest his or her
organs if they are suitable for transplant at
the time of the individual’s death.
One concern that is often raised is the
growth of an international black market for
organs. Those countries that have a surplus
of organs are generally those in
which there are the least restrictions on trade in organs.
Allegations of human
rights violations associated with the acquisition of transplant organs
in these countries are
not uncommon. Numerous (often well-supported) allegations have
been made suggesting that
China has executed prisoners to satisfy
the demand for organs.
Economics Resource Center Policy Debate; Should there be a
market for human organs? www.swlearning.com/economics/
policy-debates/human_organs.html (cited January 26, 2006).
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227
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The desire for things is greater
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Lesson
than is freely available
LifeSharers
Lesson-IIIB: LifeSharers brochure
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Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
Module-1
Lesson
The desire for things is greater
than is freely available
Lesson assessment
Multiple-choice questions
1.LQuestion: Which of the following is not scarce?
a. Sugar
b .Milk
c. Seawater
d .Time
2. LQuestion: Things are scarce
because:
a. Government rationing
prevents us from having all
we desire.
b. Our desire for things is
greater than the amount that
is freely available.
c. Individuals are greedy and
will consume everything they obtain.
d. There is an allocation and distribution problem.
3. LQuestion: Why are many resources allocated through markets?
a.Because there are not enough resources to satisfy everyone’s desires.
b.Because greedy people don’t leave enough for others.
c.Because price is the best determinant of individual wealth.
d.Because resources are so abundant price can help us choose amongst them.
4. LQuestion: How do you know when a good is abundant, or not scarce?
a.It is freely available.
b.The price is low.
c.The price is high relative to similar goods.
d.It is unavailable.
5. LQuestion: What happens to price when a good becomes more scarce?
a.Price will decrease.
b.Price will remain constant.
c.Price will increase.
d.There is not enough information to answer this question.
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
229
Scarcity
The desire for things is greater
Module-1
Lesson
than is freely available
Lesson assessment
Discussion/Essay Questions
1. LQuestion: Will we ever live in a world without scarcity? Explain.
2. LQuestion: Describe how human desires would be met with no scarcity.
3. LQuestion: If price is used to ration sugar, describe what happens to the price of sugar as more
sugarcane is grown and produced by farmers.
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Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
Scarcity
The desire for things is greater
Module-1
Answer
than is freely available
Lesson-II: Answer Key
What will you grow on your farm?
Imagine you own ten acres of productive land.
You can grow vegetables on your land, you can
raise cattle, or you can grow some vegetables
and some cattle. These are the only choices
available to you. You want to produce as much
as possible.
Assume you can grow 50 bushels of
vegetables per acre or one cow per acre. This is
given and will not change through the exercise.
Because resources (land, time, and other inputs)
are scarce you must give up producing some of
one thing to grow more of the other.
On your ten acre plot you can grow up
to 500 bushels of vegetables (50 bushels per
acre times ten acres) or raise as many as ten
cows (one cow per acre times ten acres).
You cannot, however, grow 500 bushels of
vegetables and ten cows. Remember scarcity.
If you start by producing ten cows, you
must give up some cows to produce more
vegetables. Another way to think about this is
shown in the production possibilities frontier.
Questions:
Pick a point below (A, B, C, D, or E) where
you would like to produce and circle it.
5. LQuestion: How many bu. of vegetables must you give up to produce one more cow?
Answer: 50 bushels
6. LQuestion: How many cows must you give up to produce 50 bu. of vegetables?
Answer: One cow
Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices
231
Scarcity
The desire for things is greater
Module-1
Teacher
than is freely available
NOTES
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Copyright © 2008 by MCEE (www.econedmontana.org) Economics: The Study of Choices