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Economics And Opportunity Cost Essay

710 words - 3 pages

Economics is the study of how people make choices due to scarcity. Making choices is a requirement throughout our lives of which making them is inevitable. A major factor of decisions is opportunity cost. Opportunity cost is what limits our choices by limiting the resources that we are initially capable of providing. To be more specific opportunity cost is the loss of potential gain from alternatives due to another alternative being chosen. We make choices in order to progress in a direction that we believe is the most reasonable for the scenario by analyzing input provided and output received.
Scarcity is what causes people to make choices. Our resources are finite, or not infinite. However, for some of these resources we demand more than can be produced. This causes the cost of these resources or items to increase. These limited items are what cause us to make choices. These choices are also limited to what we are able to provide as payment. This causes us to analyze opportunity cost.
If one must choose between guns and butter then that person will momentarily question themselves in order to determine which to choose. One of the first questions will have to do with price; however, in this scenario there will be a massive amount of butter that is the equivalent to the price of two guns. The next question would be about the need for the guns or butter. The person in this scenario would have to decide which item would provide a larger benefit than the other. Another question is how to obtain the item(s) when they are purchased. It should be obvious that transporting about a metric ton of butter would be rather ridiculous. All of these questions are answered by numerous factors including the opportunity cost.
Choices are inevitable throughout our lives because of how society functions. Everyone wants their fair share of your goods/resources for their goods/resources. Society derives this due to need, and society is only answered by the three economic questions: What is to be produced? How are the goods produced? For whom are the goods produced? Along...

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