Needs, Wants, Scarcity, and Opportunity Cost in Economics

Study Notes

Specialisation

Specialisation occurs when people and workers focus on one particular role or task, gaining significant skills in doing it.
Division of labour is the separation of a work process into a number of tasks completed by a separate person or group of persons.
Specialisation results in higher output per worker, increasing productivity.
Specialisation is more common due to specialised technology, machinery, and increasing global competition.
Specialisation occurs on individual, business, regional, and global levels.

The Purpose of Business Activity

The purpose of business activity is to produce goods or services that meet customer needs while adding value.
Business activity takes inputs, adds value to them, and creates products that meet customer needs.
The primary purpose is to produce goods or services that satisfy a need or demand in the market.
Goods are physical products, while services are non-physical items.
Meeting customer needs builds customer loyalty, increases brand awareness, and generates revenue.
Adding value to products or services differentiates them from competitors, creating a unique selling point and increasing customer satisfaction.

Needs, Wants, Scarcity, and Opportunity Cost

Businesses thrive when they meet customer needs and wants.
Needs are essential, while wants are non-essential desires.
Due to scarcity, producers, consumers, workers, and governments make choices about the best use of resources (land, labour, capital, and enterprise).
Opportunity cost is the loss of the next best alternative when making a decision.
Opportunity cost arises in the allocation of resources, affecting consumers, producers, and governments.

Description

Explore the concepts of needs, wants, scarcity, and opportunity cost in economics. Understand how businesses thrive by meeting customer needs and wants, and how choices are made due to scarcity. Learn about the economic problem and resource allocation.