Time constrained assessment Essay Example | Topics and Well Written Essays - 1000 words

Time constrained assessment - Essay Example In economic terms the needs and wants of individuals, companies, organizations, and whole countries are transformed into demand. This law of society raises the basic economic problem, as all these needs and wants can be satisfied only to certain extent as the resources required for its satisfaction are limited. Scarcity occurs when people want more than can be satisfied with the resources they have (Wessels 2006 2). Therefore, in order to satisfy certain needs and wants people have to choose among alternative uses of their scarce resources, such, for example, as time or money (Wessels 2006, 1). However, the economics as a study embraces a broader picture of this issue, taking into consideration not only those who consume but also those who produce. In terms of this concept, there is naturally raised the whole set of questions, such as: what goods to produce, how to produce these goods, and for whom to produce it. These questions are known as Samuelson's three questions (Howarth 2013) and help to solve the problem of scarcity resources. What to produce? – Answer to this question helps people to decide the best combination of goods and services to meet their needs (Howarth 2013). ... For whom to produce? – This question makes people to decide who will get the output from the country’s economic activity, and how much they will get (Howarth 2013). For example, who will consume these grown vegetables or fruits that have been grown? This situation forces all actors to make choices and to prefer one choice to another one. In economics, this concept of the value, people refuse from, is known as the opportunity cost (Wessels 2006, 3). Opportunity cost, also known as economic cost, is the â€Å"cost of a scarce factor of production used to produce a good or service, as opposed to another that could have been used, instead of the one adopted† (Collin 2006, 58). To illustrate the concept of the opportunity costs there can be used the following example relative to student’s life and education. The opportunity cost of going to the university is the money a student would have earned if he worked instead during the 5 years of study. Here time is a s carce resource, which an individual can spend either by getting a degree or earning money. However, by graduating the university there is increased chance for a person to find a better paid job due to the professional qualification gained and thus to recover the lost wages (Investopedia.Com). Thus, an individual has to make a choice between going to university and being employed for a given period of time. The risk of achieving greater benefits with another option is the opportunity cost (Investopedia.Com). In order to illustrate the economic problem and opportunity costs faced by a person, company, or economy can be used the Production Possibility Frontier, also known as production possibility curve. Production Possibility Frontier is a graph