To know what Economics is about, you have to understand scarcity. Scarcity means that you always want more than you can have. Every person—-child and adult, rich and poor, U.S. citizen and non U.S. citizen—-has to deal with scarcity every minute of the day, because no one can have everything they want. You cannot have all the time you want. You cannot have every toy you want. You cannot have more of anything you want without having less of something else you want. All choices have costs. Not only do you have to make a choice because of scarcity, but the cost of making that choice means you give up the chance to get something else. This is called opportunity cost.
Therefore, the choice you make is very important. Not only do you have to make a choice, because of scarcity, but also, when you making a choice, you have to give up something.
In the story poem, Scarcity, does not understand that the world is “this OR that,” not “this AND that”. In other words, when you make a choice, you have to give up something else, which is the cost of the choice. Scarcity is limited to one toy as a gift from Mother for her birthday. Then, Scarcity is limited to one toy as a gift from Mother for Christmas. But Scarcity does not believe it is fair, or right, to have to choose. She does not want to pay the cost of having to give something up when she makes a choice. She wants every toy that she can see.
- Scarcity does not understand the difference between “this AND that” and “this OR that”. What is the difference?
- Why does Scarcity want every toy on the magic tree?
- There are 10 gifts on a tree. Select two gifts. Mother says it's OK to get one of the two gifts, but not both. You must choose between two gifts. What is the opportunity cost of this choice?
Because of scarcity, we all have to make choices. No one, not even you, can have everything they want. Every time you make a choice, you have to give up something.
Assessment Activity 1:
Identify five choices you made today preparing for school. For each choice, list the opportunity cost. (Remember, opportunity cost is the next best thing you would choose to do.)
Assessment Activity 2:
Discuss opportunities that Scarcity gave up (costs) by choosing to spend the night picking toys off of the magic tree.
There are two types of needs:
What a person requires, or is required to do, to stay alive is a need. A person will need oxygen, food, water, sleep and (depending on climate) shelter. A person may need medical assistance to stay alive. But how people get these things reflects their wants.
- There are a few “responsibility” needs. A student may need to get to school because students have a responsibility to learn, so as to be prepared to make good choices in life. But how the student gets to school and fulfills the responsibility also reflects the student's wants. To walk to school, to take the bus to school, to roller skate to school, to carpool to school, to ride a horse to school, and so on, are examples of wants that may satisfy the student's need to get to school.
- Why does Scarcity believe she wants every toy?
- Can you help Scarcity to understand what types of wants will help her stay healthy? Do the Health Wants vs. Fun Wants activity. What items are examples of wants that help us stay healthy? What items are examples of wants that are fun to have, but will most likely not be needed to remain healthy?