Economics / Unit 1: Scarcity, Choices and Opportunity Cost
1.1 Scarcity and Choice
Notes
Economics is the study of how people, businesses and societies choose to use limited resources to meet unlimited wants.
- Scarcity: wants are unlimited, but the resources to satisfy them are limited. Every society faces scarcity, rich or poor.
- A shortage is different. It is temporary and happens when sellers will not offer enough of a good at the current price. Scarcity never goes away.
- Needs are things required for survival, such as food, shelter and clothing. Wants are things we desire beyond our needs.
- Goods are physical objects (a bike). Services are actions done for others (a haircut).
- Because of scarcity, every choice involves a trade-off: giving up one thing to get another.
- Microeconomics studies individual people, firms and markets. Macroeconomics studies the economy as a whole, such as inflation, unemployment and growth.
Practice
A school board has enough money to repair the gym or buy new laptops, but not both. This situation is an example of:
Limited funds mean choosing one use gives up the other.
Which statement about scarcity is correct?
Even the richest nations face scarcity. A shortage is temporary; scarcity is permanent.
Which question would a macroeconomist most likely study?
Macroeconomics looks at the whole economy, not single households or firms.
Ready for more? Take the Unit 1 test.