[ECON 101] - Midterm Exam Guide - Comprehensive Notes for the exam (26 pages long!)
Document Summary
Scarcity and choice are the 2 essential ingredients of an economic topic. Goods are scarce because desire for them far outstrips their availability from nature. Scarcity forces us to choose among available alternatives. Ex. of scarce goods: food, clothing, household goods. Scarcity and poverty are not the same thing. The absence of poverty implies some basic level of need has been met. An absence of scarcity would imply that all of our desires for goods are fully satisfied. We may someday eliminate poverty, but scarcity will always be with us. Every society must have a means to ration scarce resources among competing uses. Resources and goods can be rationed in various ways. In a market setting, price is used to ration goods and resources. When price is used, the good or resource is allocated to those willing to up other things in order to obtain ownership rights.
