Economics - Basic Concept Essay

909 WordsMay 30, 20144 Pages
ECONOMICS BASIC CONCEPT AND OPPORTUNITY COST 1.1 Concept of Wants Nature of Wants * A “WANT” is simply a desire. When we are hungry, we want to have some food to eat. When we are cold, we want to have clothes. We have a want for something even though we may not have the ability to satisfy it. * People often say that Want has the meaning of Demand. Demand is different from a Want. We are said to have a demand for something only if we both desire it and have the means of satisfying our desire. * Wants are unlimited in the sense that we always prefer more to less for the things we desire. For example, I “want” to have a BMW car, a Mercedes car, Porsche car…….there is no limit to the number of desires we have. * As our wants are unlimited, it is impossible to satisfy all our wants, because the resources in this world are limited. 1.2 Concept of Scarcity * As our wants are unlimited, it is impossible to satisfy all our wants, because the resources in this world are limited. Therefore, we face the problem of Scarcity. * Scarcity is a situation when the available resources are not enough to satisfy all human wants. * Scarcity is a relative concept; we want more than we have. * As we cannot satisfy all our wants, we have to choose which wants to satisfy and which wants to give up. Inevitably, we need to make choices. * For Example, we need to make choices to choose boyfriend or girlfriend, LV bag or Gucci Bag……. 1.3 Scarcity and Choice and Competition * When we need to make choices, our choices run into conflict with other’s choices. These conflicts in choices have to be resolved. To resolve these conflicts, we enter into competition. Competition includes price competition and non-price competition. * When we compete with each other, we need some criteria to determine

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