Problem Set 1 WORD.docx - 1 a Scarcity is where the wants exceed resources making the consumer choose how their resources will be used Every choice has

Problem Set 1 WORD.docx - 1 a Scarcity is where the wants...

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1. a. Scarcity is where the wants exceed resources, making the consumer choose how their resources will be used. Every choice has a cost. Tradeoffs have to be made that in the pursuit of one good results in losing other alternatives. Tradeoffs let people give what is not necessary to obtain what is necessary. b. i. Tradeoffs are the alternatives that are lost when a person makes a choice. For example, going to a community college then transfer in to a UC to save money, or pay for a full 4 years of the UC. Opportunity cost is the thing that wasn’t taken in a choice. For example Going to a Community College and not experiencing the freshman and sophomore years of a real college/university. ii. Cost is typically the expense incurred for a product or service being sold by a company. Price is the amount a customer is willing to pay for a product or service iii. Positive economics are based off of facts while normative economics are based off of subjected values and opinion. For example, the statement, "government should provide basic healthcare to all citizens" is a normative economic statement. There is no way to
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