Social Studies - 2019-20
CE.11a - Economic Concepts
The student will apply social science skills to understand how economic decisions are made in the marketplace by
a) explaining that because of scarcity, consumers, producers, and governments must make choices, understanding that everyone’s choice has an opportunity cost;
UNDERSTANDING THE STANDARD
Because of scarcity, consumers, producers, and government decision makers are forced to make choices.
Whenever you make a choice, you are actually making two choices. This is because whenever you choose to do one thing, you are also choosing not to do something else. What you choose not to do is your opportunity cost.
All choices have opportunity costs.
The problem of scarcity faces all individuals and organizations, including businesses and governments:
We have unlimited wants, but our resources are limited.
The goods and services we want exceed our ability to produce them.
Scarcity forces consumers, producers, and governments to make difficult choices.
Scarcity is the inability to satisfy all wants at the same time. All resources and goods are limited. Limited goods and resources require that choices be made.
Resources are factors of production that are used in the production of goods and services. Types of resources are natural, human, capital, and entrepreneurship.
Choice is selection of an item or action from a set of possible alternatives. Individuals must choose or make decisions about desired goods and services because these goods and services are limited.
Opportunity cost is what is given up when a choice is made (the second-best alternative). Individuals must consider the value of what is given up when making a choice.
Production is the combining of human, natural, capital, and entrepreneurship resources to make goods or provide services. Available resources and consumer preferences determine what is produced.
Consumption is the using of goods and services. Consumer preferences and price determine what is purchased and consumed.