Scarcity means that what people want (not what they need) exceeds the resources that are available to a country in order to manufacture the things that are in demand. This forces choice, and so without scarcity, an economy would flounder. Opportunity cost means that what you want is available, but as you don’t have enough money to buy everything, you have to choose one thing and not get the other. For example, if you have £2 and you would like a loaf of bread, which costs £2, and four bread rolls that cost 50p each, you have to make a choice. If you choose the loaf, the opportunity cost is four bread rolls as this is what you are foregoing.
By giving things a price, we are effectively proving that goods are finite, scarce, and are not available anytime we just want them. This gives things a value, develops pricing strategies and is a basic concept of economics because it encourages competiveness.
Price is very often an important factor when it comes to making a decision about what to buy, and this is an intrinsic part of opportunity cost because, in the main, people are looking for the best value that they can get for their money.
It is all of these choices that make a mixed economy work. Manufacturers are more than aware that for the majority of people, opportunity cost is what drives their spending choices, though that has to be balanced against scarcity cost, so they have to make evaluations as to how to balance the two. Ultimately, the buyer has got to be happy that their choice was the right one, and that the object that they didn’t buy (the opportunity cost) would have been less satisfying.
By giving things a price, we are effectively proving that goods are finite, scarce, and are not available anytime we just want them. This gives things a value, develops pricing strategies and is a basic concept of economics because it encourages competiveness.
Price is very often an important factor when it comes to making a decision about what to buy, and this is an intrinsic part of opportunity cost because, in the main, people are looking for the best value that they can get for their money.
It is all of these choices that make a mixed economy work. Manufacturers are more than aware that for the majority of people, opportunity cost is what drives their spending choices, though that has to be balanced against scarcity cost, so they have to make evaluations as to how to balance the two. Ultimately, the buyer has got to be happy that their choice was the right one, and that the object that they didn’t buy (the opportunity cost) would have been less satisfying.
