Needs, Wants, Scarcity, and Opportunity Cost in Economics

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.