The reasons for individuals, organisations and societies having to make choices

The reasons for individuals, organisations and societies having to make choices

1. economic problem= how to allocate scare resources among alternative uses

2. opportunity cost=the cost of the next best alternative, which is foregone when a choice is made

3. scarcity

   • market economy=resources allocate by forces of demand and supply and govt has little involvement
   • command economy=govt and its organisation are responsible for allocation of resources
   • mixed=private and public sector allocate resources

4. specialisation=concentration by a worker/workers, firm, region or economy on a range of goods and services

   • benefits
     • increase output of goods and services when compared to circumstances where each country provides itself with everything it needs
     • widening range of goods available in an economy
     • exchange between developed and developing countries
   • risk
     • taste of consumers may change
     • bad weather
     • deindustrialisation

5. PPC

6. factors of production

   • land=natural resources-mixed deposits e.g. oil and coal
   • labour=human resources, poor countries have large population and lack of well trained workforce
   • entrepreneur=human capital
   • capital=physical resource-anything that is manmade by man aid for production