The Economic Problem

The Economic Problem

1. Scarcity

   • The problem with the economy is the lack of resources available which is to a high demand. People always want more resources even though they are limited.
   • Scarcity, or limited resources, is one of the most basic economic problems we face. We run into scarcity because while resources are limited, we are a society with unlimited wants. Therefore, we have to choose. We have to make trade-offs. We have to efficiently allocate resources. We have to do those things because resources are limited and cannot meet our own unlimited demands.

2. Choices and Trade Offs

   • Making a choice made normally involves a trade-off – this means that choosing more of one thing can only be achieved by giving up something else in exchange.
     • This can be through housing, in which people are making the choice about whether to rent or buy a home – both decisions involve risk. People have to weigh up the costs and benefits of the decision.
     • Working is taken into concideration when working full or part time.
     • Transport and Travel is questioned by ensuring that you have selected the ebst possible form of transport. This may be based on time and cost that it is nedded to be made possible

3. Opportunity Cost

   • The opportunity Cost is the sacrifice of something to gain something else. It is used in order to gain the best thing by giving up the second best thing
   • A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.

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