ECONOMICS 1A
Chapter 1 - 3
, Mish Notes
Chapter 1: What Economics is all about
Economics is the study of how our scarce productive resources are used to satisfy
human wants.
Scarcity, Choice and Opportunity Cost
Needs: Necessities of life. Things that are basic to survival. Eg: Food, Water, Shelter
and Clothing.
Wants: Human Desires for goods and services. (unlimited)
Demand: A want that has the necessary means to convert that want into demand
(willing and able to)
Opportunity Cost: The value of the best alternative that was forgone.
Production Possibilities Curve/ Production Possibilities Frontier
The production possibilities curve indicates the combinations of any two goods or services that are
attainable when the community’s resources are fully and efficiently employed.
Product A: Potatoes
Product B: Fish (Baskets per
day)
The various points on the curve show the combinations of fish and potatoes that can be produced
daily with the available resources. Point A, B, C, D, E and F on the production possibility curve
show attainable and efficient combinations of potatoes and Fish. Point G, beyond the curve show
an unattainable combination and point H, inside the curve shows an attainable but inefficient
combination.
1
Chapter 1 - 3
, Mish Notes
Chapter 1: What Economics is all about
Economics is the study of how our scarce productive resources are used to satisfy
human wants.
Scarcity, Choice and Opportunity Cost
Needs: Necessities of life. Things that are basic to survival. Eg: Food, Water, Shelter
and Clothing.
Wants: Human Desires for goods and services. (unlimited)
Demand: A want that has the necessary means to convert that want into demand
(willing and able to)
Opportunity Cost: The value of the best alternative that was forgone.
Production Possibilities Curve/ Production Possibilities Frontier
The production possibilities curve indicates the combinations of any two goods or services that are
attainable when the community’s resources are fully and efficiently employed.
Product A: Potatoes
Product B: Fish (Baskets per
day)
The various points on the curve show the combinations of fish and potatoes that can be produced
daily with the available resources. Point A, B, C, D, E and F on the production possibility curve
show attainable and efficient combinations of potatoes and Fish. Point G, beyond the curve show
an unattainable combination and point H, inside the curve shows an attainable but inefficient
combination.
1
