Introductory texts

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If you are an economics student, Studying Economics will provide you with invaluable guidance for all aspects of your course, but reading, as a widely as possible is the key to success in any subject! In this section, can read a sample of Mastering Economics which will give you further insight and depth into this stimulating subject.

Mastering Economics by Jack Harvey

In addressing and solving the problem of scarcity, there a number of issues, such as wants and limited resources , opportunity cost and free and scarce goods , that need addressing.

• Wants and limited resources
• Opportunity cost
• ‘Free’ and ‘scarce’ goods

Wants and limited resources
Have you been window-shopping lately, gazing longingly at the various goods on display? If only you had the means to buy them! This is the economic problem - unlimited wants, very limited means. You just can’t get a quart out of a pint pot.

While we can never completely overcome the difficulty, we can, by ‘economising’, make the most of what we have. The student strives to make his grant go as far as possible. And the businessman takes decisions, which will achieve the maximum return on capital. The government, too, has to plan its spending in order to make the most of the funds at its disposal.

Opportunity cost
Thus economics is concerned with the problem of choice - the decisions forced upon us by the smallness of our resources compared with our wants. But choice involves sacrifice. If the newspaper boy spends his earnings on a football, he will have to postpone buying the table tennis bat he also wants. The schoolgirl who works in a store on a Saturday has to forgo the game of tennis she would otherwise have played. When the farmer sows a field with wheat, he accepts that he will have to go without the barley he could have grown.

Because resources are limited, having ‘this’ means going without ‘that’; or, as the Yorkshireman says, ‘There’s no owt for nowt in this world’. We speak, therefore, of opportunity cost - the cost of something in terms of the best alternative gone without.

Usually economising does not mean a complete rejection of one good in favour of another, but rather deciding to have a little bit more of one and a little bit less of the other. In short, as we shall see, it involves choice at the margin.

‘Free’ and ‘scarce’ goods
Few goods are so plentiful that nobody will give anything for them. Air is one of the few exceptions. In some years, too, there is such an abundant apple harvest that a farmer says, ‘Help yourself’. Such goods are termed ‘free’ goods. But most goods are ‘scarce’ - they can be obtained only by going without something else. With these goods we have to economise, so they are referred to as ‘economic goods’. They are the subject matter of economics - the study of how people allocate their limited resources to provide for their wants. It is against this backcloth of limited resources that all economic decisions by consumers and firms have to be made.

For further information on this title, see Mastering Economics