one item or service a person may purchase) will result in a lower quantity demanded (i.e. The law of demand simply states that a price increase for a particular good (i.e. As such, that third particular person will either do mathematical reasoning or simply choose at random. A third particular person does not have a preference between vanilla or chocolate.As such, that particular person will choose the 1 scoop of vanilla ice cream. Another particular person cares more for vanilla than chocolate.As such, that particular person will choose the 2 scoops of chocolate ice cream. One particular person cares more for chocolate than vanilla.For example, if you wanted to choose between 2 scoops of chocolate ice cream OR 1 scoop of vanilla ice cream, there are many ways in which one person might benefit: Rationality is the idea that people will do a cost-benefit analysis that determines if that particular person is satisfied with their benefits exceeding their costs. Scarcity is the reason we have rationality. Per hour (make your answer into a decimal) is your opportunity cost. This means the opportunity cost for when you select 2 scoops of chocolate ice cream is the 1 scoop of vanilla ice cream (what you did not obtain). Choosing the 2 scoops of chocolate ice cream means lost the chance to get the 1 scoop of vanilla ice cream. It is clear that whatever you lose out on is the opportunity cost of your choice. However, if you choose the 1 scoop of vanilla ice cream, you are losing on the opportunity of getting 2 scoops of chocolate ice cream. If you choose the 2 scoops of chocolate ice cream, you are losing on the opportunity of getting 1 scoop of vanilla ice cream. For example, if you want to choose between 2 scoops of chocolate ice cream OR 1 scoop of vanilla ice cream, you are going to have to sacrifice one choice over the other. It is for this reason that humans will examine what they must give up in order to obtain a resource. The opportunity cost is simply adding numerical values to what we must give up. A trade-off is simply the idea that we must give-up some resource (e.g. Scarcity is the reason we have to trade-off resources. (For more information, go to this page: ) Note: by no means is the list below complete. The following sections below, while not comprehensive, exist thanks to scarcity. In fact, if scarcity did not exist, the field of economics would not exist either.
Scarcity influences almost every aspect of economics. 1 Importance: Influence on Other Concepts.
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