[ECON 2010] - Final Exam Guide - Everything you need to know! (44 pages long)
30 Mar 2017
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Document Summary
Humans exist in a world where all desires can"t be fully accommodated because of physical limitations imposed upon the rate of growth in the availability of resources/commodities. The imbalance between the rate of expansion of the system and the needs/desires expressed within the system is known as the scarcity. Human wants can be unlimited while resources may not be unlimited. The imbalance between wants and means is also known as the law of relative scarcity. If people cannot have everything that they want in unlimited quantities, a means of rationing and signaling the areas of greatest relative need or desire must come into existence: this is what we call choice. The very act of choice within the existing productive limits of an economic system creates the need for sacrifice and cost as people must give up part of what they might otherwise want. These principles can be illustrated using the production possibility curve discussed below.
