Session 2
— The Basic Economic Challenge
Case Study 1.2e "The Basics of Scarcity"
Directions: Complete the following case study and record your answers on a separate sheet of paper.
Topic: The fundamental economic problem of scarcity and choices.
Objective: To identify that productive resources are limited. Therefore, people cannot have all the goods and services that they want, and they must choose certain things and be willing to give up others.
Can you have everything you want? To put it another way, do you have enough resources to obtain all of the products that you would like to have? There are very few people in the world that can answer yes to either of these questions. For the rest of us, there are choices to be made about what we purchase. Many factors influence our choices including price, our personal tastes, convenience and the availability of the product. In the following case study, you will examine a factor called scarcity and how it influences your choices as a consumer.
CS Question #1: What are the most important factors you consider when making a purchasing decision?
How much money do you have in your purse or wallet? How much money is available to you in credit cards, in your bank account or from your parents? Your response to these questions tells you about the scarcity of your financial resources. The amount of resources that you have is limited. Your financial resources change from time to time, and therefore your ability to purchase products or services also changes. In the next paragraph, you will be presented with a situation regarding scarcity. As you review the situation and answer the questions, think about what caused you to make certain decisions.
CS Question #2: Can you think of a resource that is not scarce? What resource can you identify that is extremely scarce?
You have just arrived at college and received your college loan money. With the money, you need to buy books, buy school supplies, buy a computer, pay your bills for the semester and save some money for entertainment. You have $3,000. The following is a list of the projected cost of each item:
CS Question #3: Which of the items do you consider important to achieve success in college? How would you spend your $3000?
The process of deciding how you will spend your money is often referred to as budgeting. Any resource that you have can be budgeted. The resources most often budgeted are money and time. Scarcity is an issue that you will constantly face. You must make choices that affect your happiness and satisfaction now and in the long run. In the above situation, you must decide what you are willing to sacrifice for what you can gain. Is it more important to have a great computer or money for entertainment? You might decide that the computer could be your entertainment. Today, you have an infinite amount of choices. A smart purchasing decision considers both your available resources and your values.
CS Question #4: How can you solve the problem of scarce resources when you want to purchase something but you don't have enough money?
Further Thought: