Scarcity

1. Scarcity • Scarcity is the fundamental economic problem. • Simply put — there is not enough stuff to satisfy all of our wants and needs. • We have unlimited wants, but limited resources. • As a result, we need to make choices.

2. Incentives • An incentive is something that encourages someone to do something • •Financial Incentives • Example: If you work hard at your job, you may get a raise or a promotion. • •Social Incentives - gain status, friends, etc • •Moral Incentives - “It is the right thing to do”

3. Disincentives • An disincentive is something that discourages someone from doing something • •Financial disincentives • Example: If you work drive too fast you will get a speeding ticket and have to pay a fine • •Social disincentives - lose status, friends, etc • •Moral disincentives - “It is the wrong thing to do”

4. Incentives in Action

5. With your neighbor(s), please answer the following questions • What was the GOAL of Steven’s plan? • What INCENTIVE was offered to achieve this goal? • Did the plan work? Why / Why not? • What is the lesson of this video?

6. Activity: Create a plan that uses incentives and disincentives to improve the performance of students who struggle at school • Record the details of your plan on Page 5 of your Economics workbook • Label your plan, “School Improvement Plan”