Outline why 'choice' is fundamental to the study of economics - Leaving Cert Economics - Question 1 - 2015
Question 1
Outline why 'choice' is fundamental to the study of economics.
In Economics, resources are limited, finite, or scarce, while wants are unlimited or infinite. As a r... show full transcript
Worked Solution & Example Answer:Outline why 'choice' is fundamental to the study of economics - Leaving Cert Economics - Question 1 - 2015
Step 1
Why are resources limited?
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Answer
In economics, resources such as land, labor, and capital are limited in supply. This scarcity forces individuals and societies to make choices about how to allocate these resources effectively, as there are not enough to satisfy all wants.
Step 2
The nature of unlimited wants
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Answer
Contrary to limited resources, human wants are virtually limitless. People continuously seek to improve their quality of life and pursue an array of desires, which leads to the necessity of making choices, as every want cannot be satisfied simultaneously.
Step 3
Opportunity cost
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Answer
Whenever a choice is made, there is an associated opportunity cost—the value of the next best alternative that is foregone. Understanding opportunity cost is crucial in economics, as it influences decision-making and resource allocation in the face of scarcity.
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