Scarcity

Productive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others.

Students will be able to use this knowledge to:

Identify what they gain and what they give up when they make choices.

Students face many choices every day. Is playing video games the best use of their time? Is working at a fast-food restaurant better than the best alternative job or some other use of their time? Identifying and systematically comparing alternatives enables people to make more informed decisions and to recognize often overlooked relevant consequences of choices they or others make.

Some students believe that they can have all the goods and services they want from their family or from the government because goods provided by family or by governments are free. But this view is mistaken. Resources have alternative uses, even if parents or governments own them. For example, if a city uses land to build a football stadium, the best alternative use of that land must be given up. If additional funds are budgeted for police patrols, less money is available to hire more teachers. Explicitly comparing the value of alternative opportunities that are sacrificed in any choice enables citizens and their political representatives to weigh the alternatives in order to make better economic decisions. This analysis also makes people aware of the consequences of their actions for themselves and others and could lead to a heightened sense of responsibility and accountability.

Benchmarks: Grade 4

At the completion of Grade 4, students will know that: At the completion of Grade 4, students will use this knowledge to:
1. People make choices because they can’t have everything they want. 1. identify some choices they have made and explain why they had to make a choice.

2. economic wants are desires that can be satisfied by consuming a good (an object), a service (an action), or a leisure activity.

2. Match a list of wants with the correct example of a good, service or leisure activity that satisfies each want.

3. People’s choices about what goods and services to buy and consume determine how resources will be used.

3. explain why a choice must be made, when a landowner has alternative uses for the property.

4. Whenever a choice is made, something is given up because resources are limited.

4. From a list of four toys, ask students to rank order their preferences, state their first choice and identify the second toy as what is given up.

5. the opportunity cost of an activity is the value of the best alternative that would have been chosen instead. it includes what would have been done with the money spent and the time and other resources used in undertaking the activity.

5. describe a situation that requires a choice, make a decision, and identify the opportunity cost.

6. Productive resources are the natural resources, human resources, and capital goods available to make goods and services.

6. identify examples of natural resources, human resources, and capital goods.

7. natural resources, such as land, are “gifts of nature;” they are present without human intervention.

7. use a resource map of a state to locate examples of natural resources.

8. Human resources are the people who do the mental and physical work to produce goods and services.

8. draw pictures representing themselves as pro- ducers. also, identify examples of human resources used in the production of education at their school.

9. Capital goods are goods that are produced and used to make other goods and services.

9. draw a picture representing a capital good used at school. also, identify examples of capital goods used to produce a good or service in their community.

10. Human capital refers to the quality of labor resources, which can be improved through investments in education, training, and health.

10. Give examples of how to improve their human capital. explain how a teacher invests in his or her human capital.

11. Most people produce and consume. as producers they help make goods and services; as consumers, they use goods and services to satisfy their wants.

11. identify people who are consumers and provide examples in which students were consumers of goods and services. identify people who are producers and provide examples of situations in which students helped produce goods and services.

To evaluate the opportunity cost associated with making a choice, identify what would have been gained if the best alternative use of the resources, including time, had been undertaken. When a student chooses to attend a theatrical event, the student not only gives up the use of the money spent to purchase the admission ticket but the student also gives up the time spent at the play. If that time would have been spent babysitting, the opportunity cost is the value of the price of the ticket and the money not earned in babysitting.

The alternative use for resources also depends on the context in which the choice is being made. For example, a choice to attend school may have an opportunity cost of the wages that would be earned if a student entered the workforce instead. But, in a period of high unemployment (when students may have little else to do), the choice to attend school may have an opportunity cost of spending time with friends.

Benchmarks: Grade 8

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

1. Scarcity is the condition of not being able to have all of the goods and services that one wants. it exists because human wants for goods and services exceed the quantity of goods and services that can be produced using all available resources. Scarcity is experienced by individuals, governments, and societies.

2. Making good choices should involve trading off the expected value of one opportunity against the expected value of its best alternative.

3. the choices people make have both present and future consequences.

4. the evaluation of choices and opportunity costs is subjective; such evaluations differ across individuals and societies.

At the completion of Grade 8, students will use this knowledge to:

1. role play a city council meeting called to allocate a budget of $100,000. the council would like to buy four new police cars at $25,000 each and repair two senior citizen centers at $50,000 each. explain why a choice must be made, decide how the city council should allocate the money in its budget, describe the trade-offs made, and identify the opportunity cost of the decision.

2. determine the criteria for selecting a phone and identify the trade-offs made when selecting one phone over another.

3. analyze the consequences of choosing to quit school and identify when those consequences occur.

4. individually compare solutions to a common problem, such as where to go on a class trip, and explain why solutions and opportunity costs differ among students.

Benchmarks: Grade 12

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also that:

At the completion of Grade 12, students will use this knowledge to:

1. Choices made by individuals, firms, or government officials are constrained by the resources to which they have access.

1. Compare the choices available to high school seniors from families with different income levels. explain how choices will affect the students’ lifetime income.

2. Choices made by individuals, firms, or government officials often have long run unintended consequences that can partially or entirely offset or supplement the initial effects of the decision.

2. explain how a high school senior’s decision to work 20 hours per week during the school year could reduce her lifetime income. also, explain why new highway construction may not reduce highway congestion.