The economic concept of scarcity and choice

Scarcity

Refers to the gap between limited resources and unlimited wants

Opportunity cost

Is the best alternative foregone when a choice is made

Examples of opportunity cost in the government

Increasing Garda salaries or purchasing more Garda cars

Examples of opportunity cost for individuals with limited income

Going on holiday or buying a car

Incentive

Is something that motivates an individual or firm to behave in a certain way eg bribing

Regulations

Is a law or order that must be followed a violation of the regulation results in a punishment eg fine, ban a prison sentence

Specialisation of labour

Refers to the separation of a work process in a number of tasks which each task carried out by a separate worker or group of workers

Advantages of specialisation

workers are more productive as they get faster and more efficient at there assigned tasks

Training costs are lower as individual workers only need to be able to carry out a narrow range of tasks

Disadvantages of specialisation

Staff motivation can fall which can lead to workers becoming less productive

For the worker it allows for little chance of career progression as no new skills are being developed

Cost benefit analysis

It is importantly to balance up all the costs and benefits of various options in order to make the best decision

Example of external cost

Loss of wildlife habitats along the route

Destruction of landscape

Examples of external benefits

Reduction in noice and air pollution in the urban areas through which the traffic will no longer pass

Reduced traffic congestion in the nearby urban areas that is by passed

Macroeconomics

Analysis the behaviour/decisions of governments and countries. It looks at the economy as a whole

Microeconomics

Analyses the behaviour/decisions of individuals and firms