Choice | Consumer | Economic Goods | Free Goods | Goods | Limited Means | Opportunity Cost | Scarcity | Service | The basic economic problem | The real cost of a decision | Wants | Why can individuals not have everything they want
Christian believes it is important to travel and live a healthy lifestyle. Explain how his values may influence how he spends his money. In your answer discuss any conflict that may arise out of his decision and a compromise that he could use to satisfy both his values.
Because Christian believes it is important to travel he will spend his money on overseas holidays or domestic trips around the country. Since Christian values a healthy lifestyle he will spend money on eating the right sorts of food and exercising, for example going to the gym or running. A conflict could arise because if he spends money on travel he may not have enough money left over to pay for a gym membership or to buy healthy food options, or vice versa. To resolve this situation Christian could decide to look at cheaper travel options such as backpacking and have money left over to buy the food required for a healthy lifestyle. OR he could go on a tramping or biking holiday that would satisfy his desire to travel as well as keeping him fit at the same time.
Explain in economic terms, why individuals have to make a choice between alternatives.
Individuals have limited means (income, skill, time), so can not afford to buy everything they want or have sufficient time to do everything, so they must make choices.
Using an example, describe the difference between a good and a service.
A good is an object with a physical or tangible presence, for example, a book. A service is a task done for others and is intangible, for example, a taxi ride.
Is scarcity a fact of life for all countries, rich and poor?
Yes, scarcity is a fact of life for all countries, rich and poor, because all of the world's economies experience the problem of all trying to satisfy unlimited wants using limited resources or means, which is termed scarcity.
Explain how a want is different from a need.
Idea that a need is essential for survival while a want is a desire that is not required by an individual to survive.
Explain the concept of scarcity.
Scarcity is the term that describes the condition of limited resources (means) relative to unlimited wants. Time is a limited means because there are only 24 hours in a day and therefore time spent on one option can not be used to do the other options or tasks. Individuals will choose the option they desire the most. Income (money) is a limited resource (means) for individuals because they only have so much income and therefore can not have everything they want. Individuals therefore must choose which item or option they want the most.
List examples of values that people may hold.
The importance of getting an education, the importance of keeping fit and healthy, the importance of looking after the environment and the importance of financial security. Integrity, honesty, consideration of others, fair trading.