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Understanding Wants and Needs: Economic Perspectives on Scarcity and Resource Allocation

This article explores the fundamental distinctions between wants and needs, particularly in economic terms. It defines wants as desires for non-essential goods, and needs as essentials required for survival. The discussion emphasizes the concept of scarcity, highlighting that most resources are limited, which impacts their value. Key economic principles such as consumer sovereignty, the significance of voluntary exchange in free markets, and the balance between costs and benefits of decisions are discussed. Understanding these concepts is crucial for analyzing economic behaviors and decision-making.

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Understanding Wants and Needs: Economic Perspectives on Scarcity and Resource Allocation

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Presentation Transcript

  1. Opening Question • What is the difference between WANT and NEED?

  2. What you desire. What you’d like to have. MORE! What’s required for survival. In Economics, “Needs” are no different than “Wants”

  3. How available something is. Most things are scarce to some degree Things that are freely available everywhere. e.g., Air

  4. The study of the allocation of scarce resources in the presence of seemingly unlimited wants.

  5. Things only have value if they are wanted. Value increases with desire and scarcity. How satisfied you are. People will try to maximize utility – not necessarily just wealth.

  6. There’s No Such Thing As A Free Lunch Every decision has costs as well as benefits

  7. (RESOURCES) Machinery or tools used in production Workers in production Property and inputs used in production Coordinator of production

  8. Purchased by individuals for personal use Purchased by business to produce more goods Tools; Machines Goods that last several years (cars; appliances) Goods that are consumed quickly (food; clothes)

  9. Economic Systems Market An arrangement where buyers and sellers exchange goods and services. Does not need to be a physical location. Free Market A market where exchange is voluntary. Buyers and sellers decide for themselves what and how much to buy or sell Consumer Sovereignty It is the demands of consumers that decide what and how much is produced

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