Choices

Date: 2015-10-07; view: 602.

Economic Choices

Wants Versus Needs

Wants Versus Needs

Luxuries such as concert tickets often become necessities in the eyes of consumers.How do con­sumers satisfy their seemingly unlimited wants?

Typically the term need is used very casually. When most peo­ple use the word, they really mean that they want something they do not have. Obviously, everyone needs certain things to survive—food, clothing, and shelter. Americans also consider education and health care as needs.

To economists, however, everything other than basic survival needs is considered a want. People want such items as new cars and personal computers. What begins as a luxury, or want, becomes to many people a necessity.

So how do individuals satisfy their unlimited wants in a work of limited resources? They must do this by making choices.

Everyone, including governments, must make choices in a world of limited resources. If the government allocates funds to build Stealth bombers, then funds for higher education could be limited.What is the basic economic problem that makes choices necessary?)

As a student, you probably have a small income from an allowance or a part-time job. As a result, you have to make choices about its use. Whenever you make such a spending decision, each available choice competes with every other available choice. Suppose you have $20.00 to spend. When you decide whether to spend your money on lunch or clothes or a new CD, you are making an economic choice.

Like individuals, businesses must also make choices. Businesspeople make decisions daily about what to produce now, what to produce later, and what to stop producing. These decisions in turn affect workers' incomes and people's ability to buy. Societies too, face choices about how to utilize their resources in the production of goods and services. E.g. elected government representatives in the United States must decide how much to spend on defense versus higher education. How people and societies make these choices is the focus of economics.