Econs

Definition

scarcity exists when there is an excess of human wants over what can actually be produced to fufill these wants.

I can only go to either university or to set up an ice cream stall.

Definition

To allocate scarce resources so as to maximise the satisfaction of the most wants

What to produce?

What types of goods and services are going to be produced, and in what quantities, since there are insufficient resources to produce all that is desired?

Yoghurt ice cream

20kg per day

How to produce?

What resources are going to be used, an in what quantities? What techniques of production are going to be used to produce these goods and services?

Ice cream maker

3 of them

Milk

10 litre

Sugar

5kg

Different Flavouring Essence

500 ml of each essence

Refridgerator

1

For whom to produce?

How will the output of goods and services be distributed?

Teenagers and Elderly

Definition

It represents the real cost of making a choice

Opportunity cost is the cost of any action or decision, measured in terms of the highest valued (or next best) alternative forgone

Foregoing higher education and therefore a better chance of earning a higher income