Limits, Alternatives, and Choices

Human beings are born with unlimited wants. It’s only natural. Say for instance, if someone were to give you everything that you want for free, would you stop at receiving only an ice-cream? Or a packet of rice? Obviously no. We would all happily accept bungalows, Ferraris, Lamborghinis, Mercedes, Gucci, Prada, Louis Vuitton, iPods, iPhones and whatever that is available, you name it. Come on, let’s get back to reality, nobody is going to offer you all those things for free. The unlimited wants that we have will be cut short by our limited income.

Our limited income is also known as scarcity, scarcity of resources and in this case, money. (McConnell et al., 2012) Scarcity makes it a must for us to make choices out of all wants. It narrows down options and forces us to make choices. In order for us to get something, we have to sacrifice another item. The next best thing that we forgo is called opportunity cost. For example, as a child, we are given RM 2.00 to buy any snacks. There is a packet of sweets and a packet of chewing gums which cost RM 2.00. If we were to choose the packet of sweets, the opportunity cost would be the packet of chewing gums, vice versa.

In economics, it is assumed that purposeful behavior is practiced. It reflects rational self-interest. Each and every one of us looks for good or services which can increase their utility. Utility is the pleasure, satisfaction or happiness acquired from using any goods or services. (McConnell et al., 2012) One’s behavior has no right or wrong. For instance, Ali can give RM 50 to a beggar by the street, while Abu would have use the RM 50 to spend on his child. Both of them are not wrong by the view of economics.

Bibliography

McConnell, C.R., Brue, S.L. & Flynn, S.M., 2012. Economics Principles, Problems, and Policies. Global ed. New York: McGraw-Hill Irwin.

By Gog Dick Chun