What is economics and scarcity?

Question 1

Syllabus

Answer 1

describe key concepts using economic terminology, including ceteris paribus assumption, choice, economic growth, economic resources, efficiency, factors of production, opportunity cost, production possibility curve (frontier), productivity and scarcity

describe the basic economic problem of relative scarcity and the need for decision- making by individuals, businesses and governments at local, state, national and international levels

Question 2

What are the two main branches of Economics?

Answer 2

Microeconomics involves looking at the operation of the smaller parts that make up the Australian economy. It therefore focuses on a single firm, industry, sector or market.

• the operations of a particular firm
• the nature of a single industry
• the output, employment in an individual market

Macroeconomics looks at the broader picture, combining all markets and industries and the overall state of the country’s economy. Concentrates on areas like national spending, output, income, employment and overall material living standards.

Question 3

What is scarcity?

Answer 3

Limited in supply and in demand. Not all resources are scarce, for example, AIR! Scarcity necessitates choices! When there are competing wants and needs of society, yet a limited amount of resources, choices must be made about how to allocate scarce resources efficiently.

Question 4

What are the needs and wants for Australian-made goods and services?

Answer 4

1. overseas needs and wants
2. private business needs and wants
3. government needs and wants
4. household needs and wants

Question 5

What is relative scarcity?

Answer 5

Relative scarcity is the concept that simply describes the imbalance that exists between our unlimited demands or wants for goods and services on the one hand, relative to the limited or finite resources that are available to satisfy these wants, on the other hand.