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Scarcity and Choice

Scarcity and Choice. You have been tasked with making Widgets and Wajamas Widget: tear a piece of paper in half, fold it twice hamburger-style, and staple it in the center Wajama : fold a sheet of paper 3 times hot dog-style Production Rules: Round 1: 45 seconds to make Widgets

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Scarcity and Choice

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  1. Scarcity and Choice

  2. You have been tasked with making Widgets and Wajamas • Widget: tear a piece of paper in half, fold it twice hamburger-style, and staple it in the center • Wajama: fold a sheet of paper 3 times hot dog-style • Production Rules: • Round 1: 45 seconds to make Widgets • Round 2: 45 seconds to make Wajamas • Round 3: 45 seconds to make Widgets and Wajamas Widgets and Wajamas

  3. The government spends thousands of billions of dollars every year • Even though this is a lot, this money is still scarce • The US Government and the people of the US have unlimited wants/needs and limited resources • They have to make a choice about what to spend it on • Each year, the President proposes a budget that Congress has to approve • Compromising on this is one of the biggest struggles our current government is going through The Government

  4. Supply and Demand

  5. Stock of a certain item that can be provided to people that want it • Amount of a product that producers are willing and able to sell at a certain price • Ex: Nike is willing to make and sell 50,000 Air Nichols shoes for $150 each Supply

  6. How much people want! • Amount of a product that consumers are willing and able to buy at a certain price • Ex: The demand for Air Nichols shoes would be very low if they were sold for $150. Now, if they sold them for $15… sweet deal! High demand! Demand

  7. Pay attention and figure out how much is demanded of their product at a certain price and supply that much • If they supply TOO MUCH and put more on the shelves than people are willing to buy, that makes a surplus. • If they supply TOO LITTLE, the stores will run out and more people will still want to buy the product! This makes a shortage. • Businesses must find the right balance…this is the point of equilibrium on the graph. Smart Businesses…

  8. The more potential profit! • But… people have a limit to how much they will pay for something • The amount demanded will go down if the price goes too high • As the price goes up, the quantity demanded goes down P D • As the prices goes down, the quantity demanded goes up (think of a sale!) PD The higher the price…

  9. Soda at the Movie Theatre

  10. Back-to-the Future DVD

  11. Pizza Slices

  12. As consumers, we make decisions about what to buy based on many things • A big deciding factor is price, but that’s not the only thing • Any factor that helps convince us to do a certain thing is an incentive • Some incentives for consumers: • Coupons attached to the package • Better, more appealing advertising/Celebrity endorsements • Name-brand recognition • Convenience (close, quick, accessible) • ________________________________________ Why we do what we do

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