4051YPCBM Business and Economics Decision Making
2. Explain what is mean by the term scarcity. What are the implication of scarcity
for all economics?
(Dixon, 2000) comments that scarcity is one of the key economic issues. The scarcity issue
means we need to consider how to manufacture from limited resources and what to do. This
means that the cost of making economic choices requires endless incentives. By placing a
higher price on scarce goods, economics solves the problem of scarcity. The high price
discourages competition and allows businesses to come up with alternatives. (Shah, 2014)
support that scarcity is defined as wants always exceed limited resources to satisfy them.
According to the (Hodge & Siobhan, 2017) implication of scarcity is limited production
resources-labour, capital, arrive, and entrepreneurship are restricted. It means that the
economy only has so many resources that it can use to produce goods and services at any
given time. Limited resources are one half of the fundamental scarcity problem that has
plagued mankind from the beginning of time. The other half of the problem of scarcity is
limitless needs and wishes (Madeleine, 2009). The second implication is opportunity cost.
Cost of opportunity is the advantage lost in choosing between two competing uses of scarce