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Scarcity and Choice (Public goods (Risk the free-rider problem (The free…
Scarcity and Choice
Public goods
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Private sector does not provide public goods (missing markets) as it is hard to have their property rights protected,
Examples: sanitation infrastructure, flood deference, the BBC, online learning etc
Non-diminishibility
The consumption of the good by one does not diminish the benefits that can be derived, even simultaneously by others.
Factors of production
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Supply-side policies aim to improve (not always possible) the quality and the quantity of the factors of production
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Economic goods
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A consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it
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Private goods
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Examples: gym membership, a mobile phone, a cinema ticket
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Opportunity cost
An individual does not have an unlimited income and must therefore make economic choices on a daily basis.
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Opportunity cost measures the cost of any choice in terms of the benefits of the next best or highest valued alternative foregone.
This is due to the scarcity of time, money and resources
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Free goods
Zero opportunity cost
air, water, intellectual ideas, web pages and sunlight
Free goods cannot be traded, e.g. no one living near the sea would buy seawater
Free goods (such as air and sea water) are naturally in abundant supply and need no conscious effort to obtain them
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