Exploring and Learning About the World: Chapter 13 Blog: Scarcity & Cost-Benefit Analysis

CHAPTER 13

The figure above basically sums up the definition of scarcity

(i.e. infinite wants > availability of resources).

Scarcity and decision making skills are considered the key to economic understanding for multiple reasons. For starters, people must understand that there are limited resources available in the world. This lack of available resources causes people to make decisions about choosing between remaining goods and services. Scarcity involves people having to give and take. In other words, people need to understand that sometimes they must make sacrifices. I found an important quote on the subject of scarcity and decision-making in Chapter 13 of Social Studies For The Elementary and Middle Grades: A Constructivist Approach. That quote reads, "helping students to identify alternatives, criteria, and consequences and to select what they see as the best alternative is the essence of teaching decision making" (Sunal & Haas, 2011, p. 428). Decision-making can also be identified as cost-benefit analysis. In my opinion, in life one must always have "a back-up plan." Once the concepts of scarcity and cost-benefit analysis are grasped, a person can fully achieve economic understanding.

In my opinion, many people often do not weigh the economic consequences of their actions. They often make impulse buys and cannot make the appropriate decision between alternatives.

In the picture above, I made the assumption that this women is deciding between buying the green blouse or the purple blouse.

The woman must think about the following key questions before making this economic decision:

1) How much is each blouse?

2) Which alternative is cheaper?

3) How will this purchase affect my finances in the short-term?

4) How will this purchase affect my finances in the long-term?

5) What will I sacrifice by purchasing this blouse?

6) Are there other alternatives to choose from?

7) What is the availability of each of these two items?

Students need to be taught to make rationale decisions when faced with important issues. The chapter stated that, "students should be helped to see when they need to seek additional information from printed sources or ask for professional advice to help them make decisions" (Sunal & Haas, 2011, p. 428). I completely agree with that statement because decision-making is such a complex process that requires support and guidance. Specifying and evaluating information helps students deal with real problems (i.e., economics). Evidently, decision-making involves the basic elements of problem-solving (i.e., identifying specific criteria, offering alternative choices, discussing the solution, and providing rationality for one's decisions).