Effects of Scarcity
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Scarcity implies that people cannot have everything that they want. Their resources are limited, so they must choose which of the many possible goods and services they will have. This applies to society as well as to any individual. Please discuss the topic of scarcity using the following terms and concepts:
Supply and demand
Opportunity costs
Trade-offs
Factors of production
Production possibilities frontier
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Solution Summary
Scarcity implies that people cannot have everything that they want. Their resources are limited, so they must choose which of the many possible goods and services they will have. This applies to society as well as to any individual. The solution discusses the topic of scarcity using the following terms and concepts.
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Scarcity: Is defined as an economical problem of having what appear to be unlimited wants and needs by the consumer, within a world that is restricted because of limited resources. This also indicates that not all consumer needs and demands can be met at the same time, thus needing a trade-off between the various demands (Free dictionary, 2013).
Supply and demand: This increases a product or services value or price when it is in high demand but limited in availability. This is different than when a new item or product is offered, the values and prices for this reflect more of the production cost or initial capital that is invested (Economics Academy, 2013. Example, The Umpa-Lumpa's that run my special production company come at a higher cost because of their rare and special abilities as compare to the standard production person offers.
Opportunity costs: This measure the expenditures for any decision that is made in terms of selecting the next best alternative that is used to replace one resource with another. This is to say, even though there are alternate resources for use, one has to choose the best way to utilize these resources. When choosing what is going to be the best alternate in resources, is defined as the opportunity cost of making the decision and reflects the opportunity lost (The economical lowdown, 2013). Example, Umpa-Lumpa's like to be paid with housing and food, and try ...
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