Needs, goods and scarcity

Explain in your own words what an economic need is and how it differs from a simple want. Give two examples of each related to your life as a student.

Needs change over time: ask an older person which things in your daily life did not exist when they were your age (cell phone, internet, wireless headphones). What does that show about the idea that human needs are unlimited?

A family reviews its monthly expenses: rent, streaming service, food, gym, medicines, and vacations. Classify each expense as a primary or secondary need and explain which ones could be cut with the least cost if their income fell.

A study on household expenditure in Spain shows that families in the lowest income decile allocate, on average, a higher percentage of their budget to cell phone service and internet connection ($6.8\ \%$) than to footwear and clothing ($4.1\ \%$).

1. a) Based on these data, refute the categorical statement that «secondary needs are merely superfluous inventions created by advertising». Justify how the concept of primary need evolves socially and whether digital connectivity can be considered a basic necessity in a developed economy.
2. b) Analyze the opportunity cost faced by these vulnerable households when prioritizing digital spending over other basic consumption, and argue to what extent this choice reflects a sovereign decision or a necessity imposed by the economic structure of the environment.

Classify the following goods as free or economic goods and justify each decision: the air you breathe in the countryside, a sandwich from the cafeteria, sunlight, a movie ticket, bottled water, and the school's Wi-Fi.

Distinguish between physical goods and services, and classify the following: a haircut, a backpack, a dental check-up, a notebook, and the bus ride to school. Justify each classification.

Water falls free from the sky, and yet tap water is paid for. Explain, using the concepts of free good and economic good, what turns it into an economic good: what work and what infrastructure lie behind the tap.

In a university residence hall, the dining hall is included in a fixed monthly fee (flat-rate full board). At the end of the semester, it is found that $25.0\ \%$ of the food served is thrown directly into the trash.

1. a) Interpret this waste from the perspective of marginal cost for the resident: why does a good perceived as free at the point of consumption alter incentives and generate an inefficient allocation of scarce resources?
2. b) Management is considering two reforms:

• Measure 1: Reduce the fixed monthly fee and charge for each dish individually according to its actual cost.

• Measure 2: Charge a deposit of $2.00\text{ \$}$ when picking up the tray, refundable only if it is returned with no leftover food.

Predict the incentives and possible perverse effects of each measure, and justify which one you would choose to minimize waste with the lowest management cost.

The diagram summarizes the basic economic problem, but one of the boxes is covered with a question mark. State which concept is missing and explain with one sentence what each step of the diagram means.

Explain what it means for a resource to be scarce. Identify three scarce resources in your school (spaces, equipment, someone's time) and describe what decisions each one forces people to make.

Time is also a scarce resource. List everything you would like to do on a Sunday and estimate the hours each activity would take: if the total exceeds the hours in the day, explain what basic economic problem you are facing and how you solve it.

Explain why we say that scarcity forces us to choose. Illustrate this with an example of your own where you have $\$20$ and a whole Saturday ahead of you: what options you consider, which one you choose, and what you give up.

The school cafeteria bakes $200$ sandwiches a day and there are $500$ students who would like to buy one for $\$2$.

1. a) Is there a shortage of sandwiches at that price? Justify your answer using the data.
2. b) Propose two different ways of distributing the available sandwiches and explain the criterion used by each.

The school parking lot has $40$ spaces and $95$ applications have been submitted.

1. a) Is there a shortage of spaces? Justify your answer using the data.
2. b) Compare three criteria for allocating the spaces (charging a price, holding a lottery, awarding them by seniority) and assess what each one gains and loses.

A city council organizes a free concert in a square with room for $5,000$ people and $20,000$ sign up.

1. a) Is the concert a free good? Justify your answer.
2. b) What allocation mechanisms can be used when there is not enough room? Name two and comment on their effects.