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ECS1601 Assessment 7 - Alternative 2024 – DUE 2 November 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions.
ECS1601 Assignment 7 (ALTERNATIVE COMPLETE ANSWERS) 2024 - DUE 2 November 2024
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Unit 1: Introduction to Economic
Chapter 1: The foundations of economics
Economics as a social science
o Social sciences are academic disciplines that study human society and social
relationships.
o They are concerned with discovering general principles describing how societies
function and are organised.
o Economics is a social science because it deals with human society and behaviour,
particularly with the aspects concerned with how people organise their activities
and how they behave to satisfy their needs and wants.
Micro and Macroeconomics
o Microeconomics examines the behaviour of individual decision-making unites in the
economy
Two main groups of decision makers we study are consumers (households)
and firms (or businesses)
o Macroeconomics examines the economy as a whole to obtain a broad overall
picture of the economy
Key concepts of this course
o Scarcity
Refers to the idea that resources are insufficient to satisfy unlimited human
needs
o Choice
Since resources are scarce, it is not possible for all human needs to be
satisfied. This means choices must be made about what will be produced
and what not.
o Efficiency
Refers to making the best possible use of scarce resources to avoid resource
waste.
o Equity
Being fair or just. Differs from equality because fairness is a normative
concept that can vary.
o Economic well-being
Refers to the prosperity, economic satisfaction and standards of living
among members of society.
o Sustainability
Refers to the long-term maintenance or viability of any particular activity or
policy.
o Change
Heraclitus thought that change is an essential part of life. This is important
for economics because everything is in a continuous state of change.
o Interdependence
The idea that economic decision-makers interact with and depend on each
other.
o Intervention
Government intervention, meaning that the government becomes involved
with the workings of markets.
The fundamental problem of economics: scarcity and choice
, o Scarcity is the situation in which available resources, or factors of production, are
finite. There are not enough resources to produce everything that human beings
need and want.
o Economics is the study of choice leading to the best possible use of scarce resources
in order to best satisfy unlimited human needs and wants.
Scarcity and sustainability
o The meaning of sustainability
Sustainability refers to maintaining the ability of the environment and the
economy to continue to produce and satisfy needs and wants into the
future; sustainability depends crucially on …
Sustainable resource use, referring to the preservation of the environment
over time. The problem of sustainability arises because resources are scarce.
Resources as factors of production
o Resources or all inputs used to produce goods and services are also known as factors
of production
o The four factors of production are:
Land – consists of all natural resources, including all agricultural and non-
agricultural land
Labour – includes the physical and mental effort that people contribute to
the production of goods and services.
Capital – is a man-made factor of production used to produce goods and
services (EX machinery)
Entrepreneurship – is a special human skill possessed by some people,
involving the ability to innovate by developing new ways of doing things.
Scarcity, choice, and opportunity cost: the economic perspective
o Opportunity cost
Defined as the value of the next best alternative that must be given up or
sacrificed in order to obtain something else.
Every time we choose something, we give up something else we could have
done instead.
The concept of opportunity cost is central to the economic perspective of
the world, and results from the scarcity that forces choices to be made.
o Free and economic goods
Based on the concept of opportunity cost, we can make a distinction
between free goods and economics goods (Note that the term ‘good’ is used
loosely and includes goods, services, and resources)
Free good – is any good that is not scarce, and therefore has a zero-
opportunity cost. Since it is not limited by scarcity, it includes
anything that can be obtained without sacrificing something else.
Sometimes a free good can be an economic good in some situations.
Free goods are rare.
But free goods do not necessarily mean they are goods that are free
of charge
1.2 The three basic economic questions: resource allocation and output/income distribution
The basic economic questions: what/how much, how and for whom to produce
o Scarcity forces every economy in the world, to answer the following three basic
questions:
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