1) Scarcity and Choice - MB Flashcards
Scarcity and Choice:
what is scarcity?
a situation that arises because people have unlimited wants in the face of limited resources
or when demand for a resource is greater than supply as resources are limited
Scarcity and Choice:
what are economic goods?
goods that are scarce
Scarcity and Choice:
what are free goods?
such as the Earth’s atmosphere that are not normally regarded as being scarce
Scarcity and Choice:
what is poverty?
a situation in which individuals lack the basic necessities of life or have low incomes relative to their fellow citizens
Scarcity and Choice:
what are needs?
things essential for human survival
Scarcity and Choice:
what are wants?
things that are non- essential desires
Scarcity and Choice:
what is the basic economic problem?
scarcity
Scarcity and Choice:
why will people pay for economic goods?
due to scarcity
Scarcity and Choice:
why won’t people pay for free goods?
due to abundance
poverty could be…:
- extreme scarcity; individuals lack basic necessities of life
- relative scarcity; individuals can meet fewer wants than most of their peers
Scarcity and Choice:
what do we look for when buying a good?
- scarcity requires making choices about how best to use scarce resources to meet needs and wants
- once resources are used in one area, they cannot be used in another
- sometimes resources can be used to achieve multiple objectives
eg can’t make a plane and a train
Scarcity and Choice:
what are the benefits of choices?
1) Best meet personal needs and wants
- people can make decisions for themselves, they can decide which goods best meets their needs. This leads to trade, and makes everyone better off
2) Hit multiple objectives
- A good decision within scarcity to achieve multiple objectives, such as buying a jumper that you like to stay warm
Scarcity and Choice:
what are the downsides of choices?
1) people can make bad decisions
- people may not make decisions that are in their best interests due to mistakes or because they were mislead
2) “Paradox of choice”, (other flashcard)
Scarcity and Choice:
what is “Paradox of choice”
too much choice between alternative options lead to an inability to make decisions, and no choice made
