3 Problems of Resource Allocation: SCARCITY AND CHOICE

The Problem of Resource Allocation in Economics

The above title reflects one of the most important areas of study of Economics.

In addition to the discussion in the class, you are required to read the textbook and these additional notes to be answer these questions:

  • What is Economics?
  • Can you explain what is economists mean by the term ‘the basic economic problem’?
  • What are the problems of allocation?
  • What is scarcity?
  • Why are choices necessary?
  • What is a trade-off?
  • What is Opportunity Cost?

Economic Systems

The above issues are important in any type of ‘economic system’. What do you understand by this term?

Can you name and describe some of the main economic systems and show how scarcity and choice and resource allocation may work in each system?

Essential Reading: Notes on Scarcity and Choice

One of the most important sections of this course is covered by the note which describes scarcity and choice. Please see the list of notes on the right and select ‘scarcity and choice’ for further reading.

Key task:  Exercise 1 to be completed in class.