Economics - Term 1 SAC PREP

• Economics is the study of choice and how we make people better off in terms of their living standards
• Basic survival needs

  • Water
  • Shelter
  • Food
  • Clothing
  • Education
  • Safety
• Advertising, fashion, and planned obsolescence

  Affect how our needs and wants change over time, making them even more unlimited
• Choices are necessary because our resources are limited compared to our unlimited needs and wants
• Common wants

  • Car
  • House
  • Travel
  • Nice clothes
  • iPhone
• Factors affecting needs and wants

  • Population growth
  • Advertising
  • Fashion
  • Planned obsolescence
• Relative scarcity arises when resources available cannot satisfy everything that we need and want
• Wear and tear on clothing

  Requires us to buy new clothing instead of using the same one for a lifetime
• Population growth

  Leads to even more unlimited needs and wants as the population doubles
• Fashion changes and as we become more exposed to advertising

  Our needs and wants change over time
• Government sector produces public goods and services such as transportation networks, telecommunication, health, and education
• Business sector requires resources in the form of labour, land, and capital to produce goods and services
• Government sector has unlimited needs and wants for resources like teachers, doctors, and technological improvements
• The core problem of economics is to maximize living standards by making choices due to relative scarcity
• Businesses have unlimited needs and wants for labour
• Spending decisions of businesses are constricted by financing
• Household action Sumer sector believes that needs and wants are unlimited
• Businesses want infinite money but money is a limited resource
• Economists must make choices to allocate resources to maximize living standards
• Businesses want to make large profits and require skilled labour
• Government sector requires capital equipment, consumer goods, and service staff to satisfy their unlimited needs and wants
• Government sector also needs to finance their spending and requires money
• Skilled labour is a limited resource


  Businesses compete for the most skilled labor to become more efficient
• Relative scarcity is a problem where resources are limited but needs and wants are unlimited
• Our needs and wants change over time