MEU1RM1
Introduction to economics
Economic activity refers to the production, distribution, and consumption of goods
and services, as well as any other activities that are related to the creation and use of
wealth. In contrast, non-economic activity refers to any activity that does not include
manufacturing, consumption, or use of goods and services, and does not result in the
creation or use of wealth.
One of the main differences between economic and non-economic activities is that
economic activities involve the creation and use of resources, while non-economic
activities do not. Economic activities involve the use of land, labor, and financial
resources are used to create commodities and services that may be sold on the open
market. Non-economic activities, on the other hand, are typically done for personal
or social reasons and do not involve the use of resources in the same way that
economic activities do.
Another important difference between economic and non-economic activities is that
economic activities are typically done for profit, while non-economic activities are
not. Economic activities are carried out by businesses and individuals with the aim
of making a profit, while non-economic activities are typically carried out for
personal or social reasons, without any expectation of financial gain.
Examples of economic activities include manufacturing, agriculture, trade, and
services such as banking, insurance, and healthcare. These activities involve the
production, distribution, and consumption of goods and services that are traded in
the market, and they contribute to the creation and use of wealth.
Examples of non-economic activities include activities such as volunteering,
hobbies, and personal care activities such as cooking and cleaning. These activities
are typically done for personal or social reasons and do not involve the creation or
use of wealth in the same way that economic activities do.
In some cases, there may be overlap between economic and non-economic activities.
For example, a person may engage in a hobby that involves the creation of goods
that are sold in the market, such as handmade crafts or artwork. In this case, the
activity would be considered both economic and non-economic, as it involves both
the creation of wealth and personal fulfillment.
In conclusion, economic activities and non-economic activities differ in a number of
ways, including the creation and use of resources, the aim of the activity, and the
involvement of profit. While economic activities involve the production,
distribution, and consumption of goods and services that contribute to the creation
and use of wealth, non-economic activities are typically done for personal or social
reasons and do not involve the same level of resource use or profit motive.
Scarcity
The problem of scarcity is a basic economic principle that arises from the imbalance
between unlimited human wants and limited resources. In simple terms, it refers to
the fact that resources are limited and cannot satisfy every human need and desire.
Also it can be said that it refers to the Limitation of supply in relation to demand for
a commodity. This means that people have to decide how to distribute these
resources in the most efficient and effective way possible, given their scarcity.
Scarcity is not just limited to natural resources such as land, water, and minerals, but
also to human resources such as labor and skills, and man-made resources such as
machines and technology. All of these resources are scarce, in the sense that there
are only a limited amount of them available at any given time.
The problem of scarcity is central to the study of economics, as it forms the basis for
many economic concepts and theories. For example, the law of supply and demand,
which is a fundamental principle of economics, is based on the fact that resources
are scarce and that people must make choices about how to allocate them.
There are several reasons why scarcity is a problem. First, it means that people have
to make choices about how to allocate resources. This can be difficult, as there are
often multiple competing demands for these resources. For example, a government
may have to decide whether to invest in education or healthcare, as both are
important but resources are limited. Similarly, an individual may have to decide
whether to spend money on a new car or save it for a down payment on a house.
Second, scarcity can lead to competition for resources. When resources are limited,
people may compete with each other to gain access to them. This can lead to conflict
and tension, as people may try to hoard resources or use them for their own benefit
rather than for the benefit of society as a whole.
Third, scarcity can lead to inefficiencies in the allocation of resources. When
resources are scarce, people may not use them in the most efficient way possible.
For example, a company may use a machine for a task that could be done more
efficiently by a person, simply because the machine is available and the person is
not.
Fourth, scarcity can lead to inequality. When resources are limited, some people may
have more access to them than others. This can lead to disparities in income and
wealth, as those who have more access to resources are able to accumulate more
wealth than those who have less.
Finally, scarcity can lead to environmental degradation. When resources are limited,
people may exploit them in unsustainable ways, leading to environmental damage
and depletion. For example, Deforestation can result in environmental issues
including soil erosion.
In order to address the problem of scarcity, economists have developed a number of
different approaches. One approach is to increase the supply of resources. This can
be done through technological innovation, which can help to increase the
productivity of existing resources, or through the discovery of new resources. For
example, the development of new technologies such as hydraulic fracturing has led
to an increase in the supply of oil and natural gas.
Another approach is to reduce the demand for resources. This can be done through
education and awareness campaigns, which can help to reduce wasteful consumption
patterns and promote sustainable practices. For example, campaigns to reduce plastic
waste have helped to reduce the demand for plastic products.
A third approach is to improve the efficiency of resource use. This can be done
through better resource management practices, such as recycling and conservation.
For example, water conservation programs have helped to reduce water use in
drought-prone areas.
In conclusion, the problem of scarcity is a fundamental economic concept that arises
from the imbalance between unlimited human wants and limited resources. It is a
problem because it requires people to make choices about how to allocate resources,
which can lead to competition, inefficiency, inequality, and environmental
degradation
