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“Would you do if you showed up to your first day of a new class class and you found that there were 16 classmates joining you. But there were only chairs in the room. Your teacher tells you that unfortunately we re going to have to live with the six chairs that we have and for some reason. The other ten chairs have been taken by the school for some other use so he tells you you got to work it out it s up to you guys to decide who gets the chairs and how often to get them.
The chairs have suddenly become what we in economics call. A scarce resource. You ve probably never been in the situation. Before of course.
Most good schools would make sure that all students had a chair. But in my class. This isn t always the case today my 16 new economics. Students showed up to find that there were only six chairs.
Available to go around was this for real or was this some sort of lesson in economics. That they just didn t realize that they were experiencing well turns out the latter is the case in fact the first lesson. I always teach in my economics class is that of scarcity scarcity is what we and economics. Know as the basic economic problem.
Something is scarce when it is limited in supply. And in demand not all resources are scarce for example air air is something that everybody demands in fact we all needed to live. However. It is not limited in supply.
The amount of air in our atmosphere. At least at the present time is nearly infinite. It s enough for all humans to breathe and consume the air that they need without infringing on others consumption of that air. However this is not the case for all resources that we require anytime.
Certain individuals in society demand. A good yet that good is limited in supply. It is known as a scarce resource. So what was the point of today s lesson in my first economics class.
Students aren t used to showing up and finding that chairs are scarce. They re used to having enough chairs for everybody to sit down chairs in most classes at my school are like air in the atmosphere. Everybody gets what they need without infringing on somebody else s consumption of the necessary very good so what did we do students were given the opportunity to determine who got chairs. What they needed to do was determine a system for allocating.
Scarce resources in other words. They needed to establish an economic system. Scarcity is the basic problem of economics. The very reason we have a social science known as economics is to help society deal with the scarcity of natural and other resources that we depend on for our well being scarcity necessitates choices.
What does this mean it. Means. That when there are competing wants and needs of society. Yet a limited amount of resources choices must be made about how to allocate.
Scarce resources. Efficiently and sometimes we might say equitably the very problem of scarcity gives rise to the need for a system for allocating. Scarce resources between society s competing wants and needs. So what kind of systems of allocation.
Do we have to choose from well in my class. I left it up to my students who decide how they would allocate our scarce chairs between each other let s reflect on some of the systems that they ve come up with in the past and talk about what might be considered the most efficient or equitable system based on the observations of economists that have studied problems like this throughout history here are some of the systems for allocating. The scarce chairs. That my students have come up with today and in years past.
Some of the more popular ones tend to be systems like first come first serve in other words. Whoever gets the class first gets access to a chair. Other systems that have been proposed are oldest first in other words seniority a system of seniority determines who gets chairs based on age whoever s oldest gets the chairs and whoever s youngest does not other systems that have been proposed or merit in other words those who have the highest grades. Get chairs students have also proposed a lottery system just put all the names in a hat at in the first six names that get drawn get the chairs ultimately most years somebody comes up with the idea of an auction and the oxygen system students get to bid on chairs and those who are willing to pay the most for chairs ultimately get to have the chairs after completing this exercise.
I ask my students to reflect on the different systems that they have proposed and choose one and then we re actually going to do that to determine who gets the chairs. So what would an economist say about the scarce chairs exercise. Economists would recognize the chairs that are scarce in other words. Limited in supply.
Yet. Everybody wants one are symbolic of most of the resources that we must decide how to use in society. Today. Mineral resources water resources.
Other natural resources such as those derived from the forests labor resources. Are also scarce people themselves are a scarce resource skilled labour low skilled labor. If they were not scarce. If resources and labor were not scarce then there wouldn t be a price attached to them teachers are scarce therefore we get paid to teach factory workers are scarce therefore they get paid to work in the factory oil is scarce therefore oil companies get paid when they extract the resource from the earth and sell it to the end users.
Scarcity is the basic problem on which the study of economics. Is based economic studies. The allocation of society. Scarce resources between its competing wants and needs economic systems.
Some of which we have brainstormed in my class. And some of which we didn t even begin to touch on provide society with the tools to determine who gets what resources. And how they are allocated between societies different ones and needs in the rest of our study of economics. We re basically going to be building on this problem of scarcity.
What we ll look at is the different systems that have been developed and implemented over time for allocating. Scarce resources between societies wants and needs we ll use different tools including models graphs diagrams formulas mathematics to understand how society scarce resources can be most efficiently and in some cases. Equitably or fairly distributed between those in society. Who need and want the ” .
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“What would you do if you showed up to class and there weren t nearly enough chairs to go around? Well, you re facing and economic problem that requires an economic system to solve! This lesson introduces the basic economic problem of scarcity and defines “Economics” and “Economic systems”, both key concepts for a student starting out on his or her journey to study the “dismal science”!nnWant to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! http://econclassroom.com/?page_id=5870″,
Economics, AP Economics, IB Economics, Scarcity, the basic economic problem, economic systems