Concepts Of Wants, Scarcity, Scale Of Preference, Choice And Opportunity Cost - SS1 Economics Lesson Note

Scarcity: Scarcity refers to the situation where the available resources are limited in relation to the wants or needs of individuals. Scarcity is a fundamental problem in economics because it creates the need for individuals to make choices about how to allocate their resources to satisfy their most important wants.

Scale of preference: The scale of preference is the list of wants or needs that an individual has, arranged in order of priority. It shows the relative importance of each want or need and helps individuals to make decisions about how to allocate their scarce resources.

Choice: Choice refers to the act of selecting one option from several available alternatives. In economics, individuals are constantly faced with choices because they have limited resources and unlimited wants. Therefore, they must make decisions about how to allocate their resources based on their scale of preference.

Opportunity cost: Opportunity cost refers to the value of the next best alternative foregone when an individual makes a choice. In other words, it is the cost of what is given up to get something else. Opportunity cost is important in economics because it helps individuals to make better decisions by comparing the benefits and costs of different options. For example, if an individual decides to use their resources to buy a car, the opportunity cost would be the value of the next best alternative foregone, such as buying a house or investing in a business.