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Economics Ass

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Economics

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a) Scarcity being the central economic problem is defined as the inadequacy/ insufficiency/ inability of

(economic) resources or goods and services available to fully satisfy unlimited wants. Human wants

are people’s desires for goods and services (backed by the ability to pay) and the circumstances that

enhance their material well-being. Human wants are, therefore, the varied and insatiable desires of

human beings that provide the driving force of economic activity.

Scarcity is a relative concept relating the availability of resources or goods and services to their abilities

to satisfy the unlimited wants, that is, relating people’s wants to the means available to satisfy them.

Scarcity s therefore not the same as ‘few’ resources.

Resources are the means or ingredients or inputs available for producing the goods and services that

are used to satisfy wants.

Since resources are scarce (limited in supply) it implies that such resources have alternative uses and

command a non-zero price. Thus, scarce resources are known as economic resources and goods and

services made available (produced) by utilizing such resources are referred to as economic goods and

services.

Scarcity is a feature of all strata of society, the affluent and the lower income bracket since it is human

nature to want more than one can have.

Choice is (may be) defined as the power of discretion, that it, the ability and freedom to select from

alternatives or simply as the act or decision of selecting from competing alternatives. Choice arises

due to scarcity of resources with such resources having competing alternative uses and therefore

cannot satisfy all human wants pertaining to them at the same time. Choice is made between

alternatives depending on scale of preference which differ between an individual consumer, producer

(firm/investor) or government; determined by the view to maximize satisfaction, return and equity in

provision (especially) of public and merit goods respectively.

Social environments –this is the environment in which we do operate in, this environment has people

with various incomes, classes, occupation and social support.

Physical environment this refers to the natural elements such as water and air

Genetics – this is the composition of the population

I. C.it has led to increased paper work in that people tend to affect the number of the patients

in system. This has led to the spending of a lot of time and increased costs in providing for

the care.

II. it has led to the emergence of heavy workloads this s because there is reduction in the

number of the healthcare forces.

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III. it has also led to the decreased dissatisfaction of the working conditions for the workers as

they feel they are overworks and also working under poor conditions

d. Production possibility curve (PPC) is the locus of combinations of two commodities whose production fully

and efficiently utilizes the available resources and technology in a given period of time. It shows the

maximum output a county can produce with its present productive capacity of land, labour, capital and

entrepreneurial ability. It is also a graphical representation of the basic concepts of the discipline of

economics, that is, scarcity, choice and opportunity cost: scarcity is implied by the unattainable

combinations beyond the boundary; choice is denoted by the extent of the possibility of selection from the

attainable points on the boundary; opportunity cost is depicted by the downward sloping nature (negative)

of the production possibility curve. PPC is concave to the origin denoting increasing opportunity cost and

the marginal rate of transformation (MRT) given by the absolute value of the slope of the PPC, which is

due to the use of less and less suitable resources (resources are not equally efficient) and increased

competition for resources which creates an upward pressure on factor rewards (prices measured in terms

of the quantity of the other product given up), for example, an increase in wages to attract more or retain

the same amount of labour or increase in rent in order to access and put more land into use.

Another reason for increasing opportunity cost is the Law of diminishing returns. This is because resources

are not used in the same fixed proportion or intensity in the production of all commodities. This means

that as a nation produces more of a commodity, it must utilize resources that become progressively less

efficient or less suited for the production of that commodity. As a result the country must give up more

and more of the second commodity to release just enough resources to produce each additional unit of

the first commodity.

A Production Possibility Frontier (PPF) actually stands for the extent of a country’s productive capacity in

terms of the utilization of the available resources and technology.

Units of commodity

A: (e.g. tones of

Panadol drugs)

• B

•A •D •G

• F

0 P

Units of Commodity M: (amoxill)

Fig 1.2: Production Possibility Curve

The slope of the production possibility curve (pp

) at point B<at D<at F and at any of the points along the

curve, the absolute value of the slope is equal to marginal rate of transformation which is also the

opportunity cost.

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a) Scarcity being the central economic problem is defined as the inadequacy/ insufficiency/ inability of (economic) resources or goods and services available to fully satisfy unlimited wants. Human wants are people’s desires for goods and services (backed by the ability to pay) and the circumstances that enhance their material well-being. Human wants are, therefore, the varied and insatiable desires of human beings that provide the driving force of economic activity. Scarcity is a relative concept relating the availability of resources or goods and services to their abilities to satisfy the unlimited wants, that is, relating people’s wants to the means available to satisfy them. Scarcity s therefore not the same as ‘few’ resources. Resources are the means or ingredients or inputs available for producing the goods and services that are used to satisfy wants. Since resources are scarce (limited in supply) it implies that such resources have alternative uses and command a non-zero price. Thus, scarce resources are known as economic resources and goods and services made available (produced) by utilizing such resources are referred to as economic goods and services. Scarcity is ...
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