Chapter 1 Scarcity and Decision Making
This article talks about the scarcity or the economics surrounding the oil industry as of late. Even though Oil is a physical want in today’s day and age, a weak demand for it has resulted in plummeting prices. Many projects are suffering as a result and investors have been pulling out. Yet these projects cannot be stopped because the opportunity cost of scrapping the project altogether is too high. They continue to produce their goods , oil in this case, in hopes of the market returning to normal.
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Scarcity - the fundamental fact of economic life: there is a limited amount of resources that can be used to produce a limited amount of goods and resources to meet relatively unlimited human wants
Physical wants - the wants or needs that are necessary to sustain human life. Such wants include the need for air, water, food, clothing, and shelter Goods - all concrete, visible things that satisfy human wants, that can be touched, and that last a period of time. Goods include essentials such as bread, non-essentials such as diamonds Opportunity cost - The benefit lost in taking one course of action rather than another Economics - The study of human activity involved in using scarce resources to satisfy wants. |