NCEA Level 1 Economics/Basics

Scarcity
The economic problem or scarcity is an issue all of us face. We have limited means: limited time, skills and money. We have limited time in that there are only so many hours in a day and many of these hours will be occupied by other activities we do. Limited skills is also an issue: this means that we do not have the required ability in order to all the tasks we may wish to. For example you may want to work as an economist; however there are certain skills you must first have in order to do this. You will not be able to work in this type of role without prior training and the capacity and analytical skills to cope. We also have limited money. Even the Bill Gates and Warren Buffets of this world do not have unlimited money and as a result cannot simply buy anything. We have unlimited wants and needs and we do not have the means to fulfill all of our desires.

Choices
As a result of limited means we have to make a choice as how to best use our limited resources. For instance you may wish to play on the computer but you need to do a lot of homework. As a result of your limited time you are not able to do both of these. As a result you will need to make a choice. If you decide to do homework you will not be able to to play on the computer. This means that playing on the computer will be the opportunity cost of your decision - the next best alternative not chosen. We make these choices according to our values. These values are the principles that are important to us: if you place a high importance on hard-working this will probably mean you choose to do your homework. Other such values include honesty, integrity, fair-dealing and so on. Our values differ depending on various factors such as our peer-group, up-bringing, religion, socio-economic group and age.