Major Issues on Macroeconomics - Essay Example

Scarcity is one such concept used in economics to define and explain behavior and relationship among the key variables, that is, spending and production.
Scarcity refers to the scarcity of resources meaning that the resources available for ay economy are scarce and thus should be used efficiently to produce maximum outputs. Economic goods are goods where the consumer has to pay some price to acquire them and/or to consume them. On the other hand, the non-economic goods or simply the free goods have no opportunity cost. The consumer does not have to let go of anything to use these goods. Goods involving a financial cost or any other type of cost are classified as economic goods.
Economic goods can be anything that is purchased for consumption at some price. The price is determined by the interaction of supply and demand for that particular good or service. All goods that are sold for some price are economic goods in economic terms.
Non-economic goods are those that are available for free. They can be in the form of air, government-provided goods, and services. As they are not costing anything, they have no opportunity cost either. The acquirer does not have to pay anything for its use. Similarly, they are not scarce in nature.
Economics and scarcity are related as an economics study the individual’s behavior of making choices between available goods. The decision is primarily based on the opportunity cost, marginal utility, and the scarcity of goods and/or services. Economics, thus, has close relation with the concept of scarcity.
A market is a place where the buyers and the suppliers interact. The buyers are the consumers and/or customers of any sort of good or service. The suppliers are the providers of the required good or services. The market operates because of the interaction of buyers and suppliers.
The buyers express their willingness to buy a particular good or service. The suppliers at the same time provide the required good or services. The degree of demand ad the level of the available supply of that good or service determines the market price for that product. The interaction of the supply and demand curve in economics determines the price at which the good or service will sell.
The demand curve is a downward-sloping curve showing a negative relationship between the quantity and price. As the price increases, the quantity demanded will decrease as the buyers have to pay more for that particular good or service and vice versa.
The supply curve is positively related to price. As the price of a particular good or service increases, the supply tends to increase as the sellers have a greater margin.
At a point, the downward sloping demand curve intersects the upward-sloping supply curve. This point determines the price at which the supply will be given for that level of demand.
Under normal markets, the supply and demand interaction determines the price levels and ultimately the quantity needed in the economy for that particular good or service. There can be a situation where the markets are not competitive or where there are monopolies.