Introduction to Economics:
Explain why scarcity and choice are basic problems of economics?
http://tutor2u.net/blog/index.php/economics/comments/study-note-the-basic-economic-problem-scarcity-and-choice
This is what i put for my answer..
The need to make choices arises because everything that exists is limited. How people and societies make these choices is the focus of economics. At any moment, a fixed amount of of resources is available. At the same time, people have competing uses for these resources this situation results in scarcity.
Good.
Thank You!
I have another question I'm having a hard time with.
How are trade-off and opportunity cost related?
I know that trade-off is like when you buy a CD you are exchanging the right to own it. Your exchanging one thing for the use of another. But i don't get opportunity cost.
Opportunity cost is what you gave up to purchase the CD. What else could you have bought for the $15 you spent on the CD?
http://www.investopedia.com/terms/o/opportunitycost.asp#axzz1raIQ9dF7
So its like a choice you have. Instead of buying the CD for full price which $15 I could have purchased the same CD at another store for half price.
You could have bought a nice restaurant meal or a new shirt or a book or saved the money.
Oh ok i get it now thanks again Ms. Sue
Just wondering, if that's the case of opportunity cost, wont it just keep repeating it self?
Scarcity and choice are considered basic problems of economics because they are fundamental concepts that shape the decisions we make in an environment where resources are limited.
First, let's understand what scarcity means. Scarcity refers to the condition where there are insufficient resources to meet the unlimited wants and needs of individuals and society. In other words, resources such as time, money, labor, raw materials, and land are finite, while the desires and requirements of people are infinite.
Choice, on the other hand, is the decision-making process that individuals and societies face when they encounter scarcity. Due to limited resources, we have to make choices about how to allocate those resources to satisfy our needs and wants. Choices can include deciding what to produce, how to produce it, and whom to produce it for.
To understand the importance of scarcity and choice in economics, consider the following example: Imagine you have $20 and you can either buy a book or go to the movies. Since you cannot do both, you must make a choice based on your preferences and needs. This decision is driven by scarcity, as you have limited funds and must determine how to best utilize your resources.
Scarcity and choice influence various economic concepts and principles, such as supply and demand, opportunity cost, production possibilities frontier, and resource allocation. By recognizing the constraints imposed by scarcity and the necessity of making choices, economics helps individuals and societies make rational decisions to optimize their resources and achieve their goals.
In summary, scarcity and choice are fundamental problems in economics because resources are limited while wants and needs are unlimited. Economics provides a framework for understanding how to allocate these scarce resources efficiently and effectively in order to make the best choices given the constraints we face.