Various terms and assumptions are taken in economics in order to understand the behavior of individuals, society as a whole and the patterns of production and spending. Scarcity is one such concept used in economics to define and explain behavior and relationship among the key variables, that is, spending and production.
Scarcity refers to scarcity of resources meaning that the resources available for ay economy are scarce and thus should be used efficiently in order to produce maximum outputs. Economic goods are goods where the consumer has to pay some price to acquire them and/or to consume them. On the other hand, the non-economic goods or simply the free goods have no opportunity cost. The consumer does not have to let go anything in order to use these goods. Goods involving a financial cost or any other type of cost are classified as economic goods.
Economic goods can be anything that is purchased for consumption at some price. The price is determined by the interaction of supply and demand for that particular good or service. All goods that are sold for some price are economic goods in economic terms.
Non-economic goods are those that are available for free. They can be in the form of air, government provided goods and services. As they are not costing anything, they have no opportunity cost either. The acquirer does not have to pay anything for its use. ...
They can be in the form of air, government provided goods and services. As they are not costing anything, they have no opportunity cost either. The acquirer does not have to pay anything for its use. Similarly, they are not scarce in nature.
Economics and scarcity are related as economics study the individual's behavior of making choices between available goods. The decision is primarily based on the opportunity cost, marginal utility and the scarcity of good and/or service. Economics, thus, has close relation with the concept of scarcity.
Economics is the study of the decisions that households and firms make in any economy and their impact.
2. Describe the market mechanism of supply and demand and describe how they operate in competitive markets to produce equilibrium.
Market is a place where the buyers and the suppliers interact. The buyers are the consumers and/or customers of any sort of good or service. The suppliers are the providers of the required good or service. The market operates because of the interaction of buyers and suppliers.
The buyers express their willingness to buy a particular good or service. The suppliers at the same time provide the required good or service. The degree of demand ad the level of available supply of that good or service determines the market price for that product. The interaction of supply and demand curve in economics determines the price at which the good or service will sell.
The demand curve is a downward sloping curve showing a negative relationship between the quantity and price. As the price increases, the quantity demanded will decrease as the buyers have to pay more for that particular good or service and vice versa.
The supply curve is positively related to price. As