Question

1. Give three examples of how scarcity has impacted you personally . Be specific, list each example and then be sure to explain how each example impacted you.

2.   Analyze the Production Possibilities Curve below. Explain opportunity costs and scarcity and how it relates to this example.

Answer 1

1) Scarcity is limited resources that is available to fulfill human wants and needs.

Egs of scarcity-1)Gasoline shortage in 1970. This affected me personally as price of gasoline rose high and affected my budget.2)Over fishing resulted in scarcity of fish. This affected me as supply of fish was reduced . Since demand remained the same price rose.3)In 2012, Avian flu killed millions of chicken in Mexico and this led to scarcity of eggs which is an important Mexican diet.This affected me as egg is an important element of my diet too .

2)  The PPC shows the various combination of two goods that can be produced with the resources available.The PPC takes into consideration scarcity and opportunity cost.Scarcity is limited resources that is available to fulfill human wants and needs.Opportunity cost is the benefit that is given up to acquire something else ie it the cost of the next best alternative choice.made .The PPC shows the opportunity cost of moving from one combination on the curve to another combination ie how much of one good is given up to get more of the other good..Points on the PPC are efficient , points in the interior are inefficient and points beyaond are unattainable. The example shows scarcity of gasoline and so people will move to the next best alternative available.