Scarcity and Opportunity Cost

The Economic Problem

Economics is focused on
dealing with a main problem
called scarcity. Scarcity means
there is not enough of
something that people want. In
society, people have a lot of
wants and needs; these wants
and needs are considered
unlimited. Because people’s
needs and wants are unlimited,
there are not enough resources
to satisfy them. Therefore, an
economic problem exists; the
problem is that there are NOT enough resources, goods, and services
to meet everyone’s needs and wants.

Due to the scarcity

of resources, we
have to make a lot
of choices. Each
time we buy or use
something, we have
to make choices.
We can’t have
everything we want
because there is a

© Careers and Life Skills Lessons, All Rights Reserved.

limited (scarce) amount of things available.

Answer each question with a complete sentence.

1. What is the main economic problem?

The main problem in Economics is Scarcity.

2. What does scarcity mean?

Scarcity means there isn’t enough of what people want.

3. What is unlimited or endless?

Needs and wants are endless in Economics.

4. What is limited?

Resources are limited.

5. Why can’t all of people’s needs and wants be satisfied?

Peoples wants and needs are unlimited.

6. Because of the scarcity of resources, what do we need
to make?
We have to make a lot of choices on what is actually
important.
7. Why can’t we have everything we want?

There is limited amount of things available.

© Careers and Life Skills Lessons, All Rights Reserved.

Because of scarcity, every time we decide to buy something we

we must think about the benefits we will receive from it (the good or
service) as well as the cost of it. Each purchase has a benefit and a
cost related to it. This cost is not just monetary (money); the cost is
also economic. This type of economic cost for each purchase comes
from giving something up that you could have had instead. For
instance, let's say you want to buy a piece of fruit and have the choice
of an orange or apple and only enough money for one piece fruit; if
you decide on the apple, then by choosing the apple, you gave up a
chance or missed the opportunity of having the orange. Giving the

© Careers and Life Skills Lessons, All Rights Reserved.

chance or the opportunity of having the orange, would be what we call
the opportunity cost. Therefore, every choice we make has a value. In
economics, the value is determined by looking at what was given up
for each choice made. In short, an opportunity cost is the cost of the
missed opportunity. Hence, every time we make a purchase, we weigh
the benefits and the opportunity cost.

Answer each question with a complete sentence.

8. Because of scarcity, every time we decide to buy something

we think about what two things?
9. The economic cost for each purchase comes from what?
10. What does every choice have?
11. How is the value of each choice or purchase we make
decided?
12. What does opportunity cost mean?

ANALYSIS: The Economic Problem

© Careers and Life Skills Lessons, All Rights Reserved.

 Directions : Use the picture above to help answer the following
questions:

1) What does scarcity mean?

There isn’t enough for everyone.

2) What is there an unlimited amount of in the world?

Needs and Wants

3) What is there a limited amount of in this world?

Resources-Goods and Services

4) What are people fighting over?

Resources
5) What appears to be the economic problem?

Scarcity
COMPREHENSION CHALLENGE

Scarcity and Opportunity Cost

Directions: Select the best answer. Highlight the answer choice selected.

1. What is the main economic problem?

a. to many resources

b. not enough needs

c. scarcity

d. All of the Above

© Careers and Life Skills Lessons, All Rights Reserved.
 2. What does scarcity mean?

a. People are scared.

b. There is not enough of something.

c. Too much of something.

d. None of the above.

3. What is unlimited and endless in economics?

a. resources

b. raw materials and labor

c. needs and wants

d. goods and services

4. What is limited in economics?

a. needs

b. resources

c. wants

d. All of the above.

5. Because of the scarcity, what do we have to make?

a. choices

b. money

c. products

d. None of the above.

© Careers and Life Skills Lessons, All Rights Reserved.

6. Every time we make an economic choice, what two things occur?

a. A profit and a loss.

b. A benefit and profit.

c. A benefit and a cost.

d. None of the above.

7. How is the value of each purchase or choice we make decided?

a. By looking at the benefit.

b. By looking at the missed opportunity.

c. By looking only at the monetary cost.

d. None of the above

8. What does opportunity cost mean?

a. It is what a person gives up when they make a choice.

b. It is the idea that scarcity is an economic problem.

c. It is that choices have benefits.

d. None of the above.

True or False

9. ___True__________We have a limited amount resources but there is

an endless amount of needs and wants

© Careers and Life Skills Lessons, All Rights Reserved.

10. ___False__________Because of the economic problem, people and
governments don’t have to make many decisions in how best to deal with
the scarcity.

11. ____True_________ Every economic choice we make has a value.

12. List two resources that you think are very scarce in the world?
1.Coal
2.Water

13. Give an example of an opportunity cost for something you

recently bought.

a. What did you buy? Ice cream

b. What was the benefit (how did it make you feel good) that you
received from buying the good?

Ice cream is a treat that is very good that I don't have often.

c. What was the economic cost of the good? Meaning what else
could you have bought instead and what did you miss out on?

Something healthier food wise.

© Careers and Life Skills Lessons, All Rights Reserved.

 Costs Needs

Wants Benefits

The Economic Problem Resources

Scarcity Scarcity

Choice Missed Opportunity

Directions: Complete the two charts below using the appropriate terms above.

1.Choice

2.Benefits

3.Missed Opportunity

4.Scarcity

© Careers and Life Skills Lessons, All Rights Reserved.

 5.The Economic
Problem

6.Resources

7.Needs

8.Wants

© Careers and Life Skills Lessons, All Rights Reserved.