How people behave in a world of

limited resources and

unlimited wants

Identify needs from the following categories

• Transportation• Shelter• Pets• Recreation• Clothing• Food• Education• Telephone

Identify needs from the following items

• Van Camps Pork and Beans

• Apt. 210, 1505 Garfield Ave., Tacoma, WA

• German Shepard dog• Coleman Oasis tent• Whamo Popcorn• Levi’s jeans• Purdue University college

degree• Skippy’s Peanut Butter

• Van Heusen long sleeve shirt

• Oscar Meyer Wieners• Texaco unleaded• Miller Lite• Dairy Gold 2% milk• Air Jordans• Fruit of the loom briefs• Kingsborough Community

Associate degree• Aquafina bottled water

WANTS AREUNLIMITED

Needs and wants is a false distinction for economists –

Economics is all about choice

“What kind of food do you want?” is an economic question

Resources

Are

Limited

Because Resources are LIMITED and

Wants are UNLIMITED

• THERE IS A NEED TO

MAKE DECISIONS or TRADEOFFS

• THE COST of selecting ONE choice – IS GIVING UP ANOTHER

THIS IS CALLED

OPPORTUNITY COST

Usually choices are not of an “all or nothing” nature-

although we’re all familiar with the “clean your room, or else”

ultimatum

So economists define opportunity cost as the alternative forgone

The non-price value of any choice is the next best alternative –

Think about selecting your college