?The Basic Economics Problem Essay
The highlighted sentence are copying from the textbooks
Scarcity – the resources that are limited in supply so that people have to make choice to buy them.
Free Goods – the resources that are unlimited in supply, like air and water on the earth. Economics Goods – the resources that are limited in supply and they are scarce.
People have infinite needs and wants but there are limited resources on the earth, so that people have to make choice and have the trade-off when buying the resources. E.g. People want a big house or big flat, but there are limited lands (resources). They want so expensive food like shark fins but there are limited shark for hunting. The basic economics problem we face now is to allocate the resources to the people, as we said on the above, people will have unlimited wants and needs but there are only limited resources. So there will be trade-off. The opportunity cost is what we need to give up obtaining and getting something. (Definition: the benefits forgone of the next best alternative. ) Opportunity Cost – the benefits forgone of the next alternative.
Production Possibility Frontier(PPF) – the curve that shows the maximum potential level of output of one good given a level of output for all other goods in the economy. We can say the productive potential of the economy fails or increases. And when there is a growth in economy, the curve in the production possibility frontier will bow outward and inward if the economy falls. Growth in economy (reason 1 ) – the quantity of the resource increase. It means the number of output increases, maybe some factories are built and more workers are employed. (reason 2 ) – the quality of the products increase, we can say the standard of the product s is improved as the education of the workers is better or the technology improved in the factories. Falls in economy (reason) – there are wars that destroyed the factories or infrastructure. And maybe there are large protests against the government and the workers stop working and fight for their demands. And these can make the production possibility frontier bowing inward.
Margin – a point of possible change
A marginal change is the minor change for the plan to earn much it can from the situation.