Scarcity & Resources - YouTube

Welcome to economics class, today we are going to learn about scarcity and resources. The real wealth  

of the United States is not money, does that surprise you? our nation's wealth is actually  

the resources we have and the goods and services we produce. Resources are what we use to produce  

goods and services, there are three basic types of resources, first, natural resources are any natural  

material, like land water, oil, timber, iron, or coal that can be used to produce goods and services.   

Second, human resources refer to any person and their particular abilities and skills,

this is the concept of people and their  potential as a resource, examples include  

factory workers, truck drivers, plumbers, teachers, and police officers. Third, capital resources are  

tools, equipment, and buildings that are used to help produce goods. Capital resources are used  

over and over without being used up, like trucks, factories machines, computers or cash registers.   

Everyone has needs and wants, needs are what we must have to survive like food, water, and  

shelter. Wants are what we could do without like sports cars, designer clothes, and expensive jewelry.  

Most of us cannot have everything we want because our resources like time and money are limited,  

since we cannot buy everything we want we must decide how to use the limited resources we have. 

Countries face the same kinds of questions about resources, no country has an unlimited supply  

of resources to meet people's needs and wants, this shortage of resources is called scarcity  

there are just not enough resources in the world to satisfy everyone's wants and needs.  

Let's look at an example of scarcity in the United States, our nation produces some oil but not  

enough to run all of the cars, farm machinery, and factory equipment that make up our vast economy,  

therefore we must import oil from other countries,  Saudi Arabia has such an abundance of oil that it  

exports oil to other parts of the world including the United States, but on the other hand in Saudi  

Arabia water is an extremely valuable and scarce resource, to prosper and grow the Saudi arabinans  

have built huge plants to convert salty sea water to fresh water, they have even considered  

towing giant icebergs from the arctic and melting them for fresh water. This is just  

one example of the impact of scarcity. Scarcity means that we have to make choices and these choices involve  

costs, some of these costs are obvious they are called real costs. Real costs are the actual costs  

of making a product or providing a service, for example how much does it cost to build a house.   

The real cost of building includes expenses such as equipment, labor, materials, and fees,  

other costs are not as obvious as real costs, they are called opportunity costs. For example  

if you had to choose between starting a job immediately after high school or going to  

college, the option you didn't select was the opportunity cost of the option you did select,  

in other words, what you give up when you make a decision is your opportunity cost. Now we will  

learn about production's possibilities curves, production possibilities curves show you the  

amount of two products you can make at the same time, this production possibilities curve uses  

a restaurant as an example and shows you the amount of cheeseburgers and chicken fingers the  

restaurant can cook at the same time, the potential number of cheeseburgers the restaurant can cook  

are on the y-axis, the potential number of chicken fingers the restaurant can cook are on the x-axis,   

this line known as a curve shows you the amount of each you can make at the same time.   

here's how it works, pick a point on the line and trace your finger over to the y-axis  

at this particular point the restaurant can cook five cheeseburgers, now trace your finger down  

to the y-axis at this point the restaurant  can also cook six orders of chicken fingers,  

if we move further down the curve to point B we can see that only two cheeseburgers can  

be prepared if the restaurant needs to cook nine orders of chicken fingers, similarly at point C the  

restaurant can prepare eight cheeseburgers but only three orders of chicken fingers. 

Remember a productions possibilities curve shows how productive you can be with your  

scarce resources so at point D where you see a shift inward it means the restaurant  

is not using their resources to their full  potential, perhaps a cook is out sick, similarly  

if you see a shift outward like point E, it means the restaurant has increased their productivity  

perhaps they bought an additional grill. Now we will discuss the three economic questions;  

one what should we produce? two, how should we produce it? and three, for whom should we produce?  

Every country must answer  these three economic questions.  

let's look at each of these questions in detail,  first, what should we produce? countries produce  

different things, in the United States we  produce mostly consumer goods and services.   

Consumers are people who buy goods and services to satisfy their wants or needs,  

consumer goods are different products manufactured for personal or household use. In contrast other  

countries such as Japan manufacture a great deal of equipment for business and government use, some  

countries like Russia and North Korea have in the past concentrated their resources on manufacturing  

military goods. The next logical question is how does each country decide what to produce?  

in Japan and the United States consumers and businesses often decide what to produce, in  

Russia a government committee makes  these decisions, even in the United  

States the government makes some decisions about what to produce and spend money on.

Now let's look at the question how should we produce? in each country there are two kinds of  

producers; the government, and private business in a few countries the government produces  

most goods and services, however, in the United States most goods and services are produced by  

private businesses. One of the ways businesses determine the best way to produce is through  

the allocation of scarce resources, for example should human labor be replaced with machines?,  

should a carpenter spend his resources on a nail gun or continue to use his hammer ? Now we will look  

at the last question for whom should we produce? how do we decide who receives the goods and  

services? and how do we know how much they will get? The answers vary from country to country.  

In some developing nations only a few wealthy people less than one percent of the population  

receive most of the nation's output, the  rest of the population lives in poverty.  

In other countries the government provides everyone with basic necessities and places  

large taxes on the income of the wealthy. In the United States and other industrialized countries  

such as Great Britain, Germany and Canada, the economic status of its citizens varies,   

some of the population is wealthy, some are in poverty and some fall in the middle.