Micro Short Answer - Personal Statement Example

This in itself cannot determine the power of choice. Other factors are critical when making any economic decision. These include opportunity costs, credit market, prices and desires. The fulfillment of the fundamental needs depends on the desire with the market prices playing a critical role. The purchase behavior depends on opportunity costs or tradeoffs. The credit market determines the ability to borrow and purchase items. For instance, people contract their spending whenever the high borrowing cost raises the consumption prices (Jiang 407). 2.0.

Four resource categories A resource category refers to the source that provides benefits to people. A resource category can be in the form of money, staff, service or asset. The four primary categories of resources include government, education, health and family, and business. i. Education acts as an investment in an economy. An informed economy highly depends on skilled, knowledgeable and educated workforce. Goods education is an indication of increased economic performance. ii. Government is critical in creating jobs within the private sector and plays a significant role in finding projects.

Whenever a particular government level funds a project, other levels of the government may be prompted to fund the same projects through private foundations and private capital funding. Government plays a significant role in fiscal stimulus package, monetary policy action, and other government interventions. iii. The family acts as a source of resource like labor, production and decision making. The population growth is a critical concept of economics as it determines demand and supply. On the other hand, health determines productivity of the population/family. iv. Business provides services to people.

These include supply of goods and services, harnessing of resource and other capital, provision of employment and preserves the natural resources among others (Jiang 410). 3.0. Scarce factors of production The major factors of production are land, labor and capital. Limited factors of production imply shortage of such resources. This indicates insufficiency of productive resources in an economy towards the fulfillment of human needs and attainment of goals. Scarcity and its notion in economics.

Scarcity refers to seemingly having unlimited wants in an environment of limited resources. In economics, scarcity indicates a fundamental economic problem where the productive resources are insufficient in an economy. Economics relates to purposeful human action, and without scarcity, economics cannot suffice. Scarcity creates the need for people to consume. Abundance never creates the need for people to make tradeoffs. Scarcity enhances rationing and encourages competitive behavior where people compete for the scarce goods (Jiang 412). 4.0.

Production possibilities curve and relationship to the law of increasing costs Production possibility curve refers to the graph showing the combination of various amounts of commodities producible using fixed amount of each factor of production. This graphically bounds production set for a group of fixed input quantities. The curve indicates the maximum possible production level that defines the production efficiency. The increase in production of one good requires one to sacrifice a greater amount of another good.

This is because of inequality in efficiency of resources. For instance, opportunity cost for producing j in terms of k