Application Exercise 1h
Economics is all about how people make decisions about the use of resources. These decisions must be made because every nation’s resources are scarce when compared to the demands placed upon those resources. This is referred to as the problem of relative scarcity.
When we decide to use our resources in some way, it necessarily involves us foregoing the opportunity to use those same resources in some other way. This is because the availability of resources is limited and they have alternative making can be defined as (he value that could have been ways of being used. The opportunity cost of decision gained if the next best alternative was chosen.