Assignment help -opportunity cost/scarcity (1 Viewer)

[th_05]

Hi folks
I am really struggling on a question I have been presented with:
Explain why, in a mixed economy, the concepts of scarcity and opportunity cost are important for governments. Illustrate your answer with examples.
I am relatively new to economics and although I know what scarcity and opportunity cost are, I cant quite get my head around explaining the importance of them to governments. Any help would be appreciated GREATLY! Getting pretty desperate on this one now. Thanks.

 

[Lolsmith]

Think of the value of money in relation to scarcity and government expenditure in terms of opportunity cost.

i.e: Scarce money is valuable money. Maybe this has something to do with exchange rates.

and

Hypothetically, $100m spent on education is $100m not spent on health care.

You have also posted this in Business Studies. Good luck.

 

[th_05]

Thanks for that. However I am still struggling, how can I make this into a 300 word answer? Describe what scarcity is and how the government as to deal with, e.g. oppertunity cost of putting money into education over health. Cant seem to think of much to say for this one.

 

[klaris]

What is more important?

Having a generation under-educated, ignorant = low-skilled workers, low paying jobs = weak economy.

Having a bad health system = horrible working conditions, strikes, lack of beds, lack of jobs = lack of doc's and ultimately an under-funded health system which sees many people die needlessly due to poor management/skills/lack of funding.

That was constructed in under two mins. Certaintly you can build a measly 300 words from that.

Unlimited wants and limited resources. Can't simply go crazy and sell everything at a cheap price and have everyone buy everything at a cheap price; resources would run out too quickly.

I find most of econ common sense.

EDIT: also. HSC: 2008?

 

[SeCKSiiMiNh]

scacity: fundamental economic problem where our resources are finite whereas our wants and needs are unlimited. hence, the government must decided how to best utilise their resources etc etc etc

thherefore, trade-offs must be made and this is where opportunity costs comes in.

 

[Lolsmith]

This is only 300 words??? Man... that's a fantastic piece of homework.

"In an economy, the government must take many economical factors into account to run a nation effectively. One of these such things is the opportunity cost of its expenditure in relation to economic development. For instance, education is an essential part of any economy, as it produces a higher skilled labour force. [thanks for that klaris] With a higher skilled labour force, comes a stronger basis of employment which then allows for a stronger economy. The only issue relating to this is that the money spent on education cannot be spent on any other sector, and therefore those sectors are somewhat weakened."

There's about 100 words that you can chuck into it.

 

[klaris]

This is only 300 words??? Man... that's a fantastic piece of homework.

"In an economy, the government must take many economical factors into account to run a nation effectively. One of these such things is the opportunity cost of its expenditure in relation to economic development. For instance, education is an essential part of any economy, as it produces a higher skilled labour force. [thanks for that klaris] With a higher skilled labour force, comes a stronger basis of employment which then allows for a stronger economy. The only issue relating to this is that the money spent on education cannot be spent on any other sector, and therefore those sectors are somewhat weakened."

There's about 100 words that you can chuck into it.

No worries.

I wish my econ assignment's were that easy!

 

[th_05]

Thanks very much for the help guys you have saved me. Maybe I shouldnt consider doing economics in higher education as you seem to have found it extremely easy. I actually have 5 questions, 300 words each in total. I was just struggling on this one a bit. Thanks again!

 

[Lolsmith]

Nah. Economics isn't super easy. It's just opportunity cost and scarcity are one of the first key concepts explained in Preliminary Economics. If I hadn't done Economics, I'd be in the same boat as you are.

 

[klaris]

Yeah, that's one of the FIRST concepts we learnt in pretty much the first two lesssons.

Although I'm finding it quite easy now as it is completely new and no background knowledge and such.

It's great.

 

[th_05]

Another question unfortunately folks!

Give an example of another market (other than those above - cigarettes and alcohol) within which the government has intervened. Explain why, and the potential outcomes of intervention, making use of economic analysis.

I'm thinking petrol? But what economic concepts can come in to it? taxing petrol = less people buying it = less congestion. I can get this in there, I am just struggling with the economic side of things. Any help much appreciated.

 

[Lolsmith]

They also intervene/have intervened in car production.

Up until a few years ago there used to be local content rules put on any car made in Australia. Local content rules is a form of protection that governments use to stimulate domestic employment by forcing any producer to use a certain percent of domestically made items to put into the product. The only issue with this is that it's extraordinarily inefficient because it makes parts for cars more expensive, therefore making the whole car more expensive for consumers. Although there is higher employment, it is not beneficial to the economy as a whole because resources are allocated to inefficient industries.

 

[th_05]

Thats brilliant, thanks so much for your help.