When we have more choices than we have resources, different things can happen:
Scarcity: This is a big problem in economics. It happens when people want more than what is available. For example, if there are 10 million people in Sweden who want to go to college, but there are only 200,000 spots, then scarcity is a real issue.
Choice: People and societies have to make decisions about how to use their resources. Since resources are limited, we often have to make sacrifices. For instance, if a student spends 3 hours studying for an economics test, they give up 3 hours they could have spent relaxing or having fun.
Opportunity Cost: This means considering what you give up when you choose something else. For example, if a business chooses to spend $1 million on new technology instead of building a bigger factory, the opportunity cost is the money they might have made from expanding the factory.
In Sweden, about 20% of high school graduates didn’t go to university in 2022 because of these limits. This shows how tough decision-making can be when resources are short.
When we have more choices than we have resources, different things can happen:
Scarcity: This is a big problem in economics. It happens when people want more than what is available. For example, if there are 10 million people in Sweden who want to go to college, but there are only 200,000 spots, then scarcity is a real issue.
Choice: People and societies have to make decisions about how to use their resources. Since resources are limited, we often have to make sacrifices. For instance, if a student spends 3 hours studying for an economics test, they give up 3 hours they could have spent relaxing or having fun.
Opportunity Cost: This means considering what you give up when you choose something else. For example, if a business chooses to spend $1 million on new technology instead of building a bigger factory, the opportunity cost is the money they might have made from expanding the factory.
In Sweden, about 20% of high school graduates didn’t go to university in 2022 because of these limits. This shows how tough decision-making can be when resources are short.