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s1501 study notes 2023 Summary notes of all study guide Units
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lOMoARcPSD|4339232Ecs1501 study notes
2023
Economics (University of South
Africa)
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Study Unit 1: About Economics
Economics in Brief
Economics is the study of how our scarce productive resources are used to satisfy human
wants.
Economics is a discipline studying how people choose to use resources (cash, land,
buildings etc.) to satisfy their daily needs/ wants. It involves the production,
distribution and consumption of goods and services.
Economics is primarily concerned with the choices that are made in seeking to use
scarce resources efficiently.
As long as the marginal benefit (i.e. additional benefit) is greater than or equal to the
marginal cost,
then a consumer’s choice would be rational.
Wants, Needs and Demand
Wants: Human desires for goods and services, unlimited.
Needs: Necessities, essential for survival.
Demand: The amount of a good or service that a consumer wants to purchase at a
given price.
A want is something you would like to have. It is not absolutely necessary or essential
for survival, but it would be a good thing to have. Human wants are unlimited or
insatiable.
A need is something you can't do without.
A demand for goods and services is only a demand, if those who want to purchase
them have the ability to do so.
Real life examples:
A baby needs milk but wants
candy. Humans need food for
survival
You can demand a cellphone, if you have the money to buy it.
Basic Economic Problem
1. Scarcity
2. Choice
3. Opportunity cost
Scarcity is the basic economic problem that arises because people (society) have
unlimited wants, and the resources to satisfy them are limited.
Hence, people have to make choices among these limited resources and decide
which satisfies their needs.
Opportunity cost of a choice is the value of the best alternative that could have been
chosen but was not chosen.
The Concept of Opportunity Cost
, Opportunity cost is the cost expressed in terms of the next best alternative sacrificed.
.
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