Project 1 needs, wants, scarcity and opportunity costs Flashcards
Needs, wants, scarcity and opportunity costs
What is opportunity cost?
Opportunity cost is something that is given up in order to do something else.
Give an example of opportunity cost?
For example this could be when a business must choose between two different office locations, they will face opportunity costs for the location they do not choose.
Another example is if a business has £5,000 and has to choose between using the money for a new advertising campaign or more training for its staff, they must weigh up the opportunity costs of picking one option over the other.
Meaning of need (business)?
Needs are those goods and services that we have to consume if we are to live
Give example of need (business)?
Food, shelter and warmth.
What is want (business)?
Wants are goods and services that we would like, but do not have to consume in order to survive.
Give example of want (business)?
Phone, computer and a television.
Meaning of scarcity?
Scarcity is the concept that resources are only available in limited supply, whereas society’s demand for those resources is unlimited.
Give an example of scarcity in a clothing store?
Imagine you have a budget of $100 to spend on clothing. You go to the store and find a pair of shoes that you really like for $50, a shirt that you like for $30, and a pair of pants that you like for $40. You can’t afford to buy all three items, so you have to make a choice about which items to buy. You might decide to buy the shoes and the shirt, but then you wouldn’t be able to afford the pants. Or you might decide to buy the pants and the shirt, but then you wouldn’t be able to afford the shoes. This is an example of scarcity in action, where your budget (a limited resource) is not enough to satisfy all of your wants (in this case, buying all three clothing items).
