ACCT500 – Economics Module Final Assessment Based on your reading of your Economics book, answer the following questions: 1. Based on your reading in Chapter 1, explain why the concept of scarcity is...

Running Head: ECONOMICS        1
ECONOMICS        2
ACCT500 – ECONOMICS MODULE FINAL ASSESSMENT
Table of Contents
1)    3
2)    3
3)    3
4)    4
5)    4
6)    5
7)    7
8)    8
9)    9
10)    9
11)    10
12)    10
References    11
1)
Scarcity means that there are limited resources for unlimited wants. There is a scarcity of one or the other resource in every part of the globe. On the other hand, according to Salvatore (2015), economics is the study of production, distribution and consumption of goods and services in an economy. As economic deals with fulfilments of the resource requirement of the society and the resources are limited in quantum.
Due to this, there is a requirement for prioritization for the purpose of allocation of scarce resources. As the want are never ending, the demand for resources is also never ending. However, not all the wants can be satisfied with the limited pool of resources. This leads to the basic problem of scarcity and sufficient knowledge of economics helps in allocation of resources in the most rationale manner.
2)
The four elements of economic thinking involve making assumption, exploring the relationship using ceteris paribus, thinking at the margin and responding to the incentives. As noted by Brickley, Smith and Zimmerman (2015), assumption are required to ensure that the subject matter is understandable and there is significant focus on the subject matter. If all the factors are fluctuating, it may not be possible to form a relationship.
Therefore, ceteris paribus is used, which keeping other things constant. Marginal thinking involves comparison of the marginal cost and the marginal benefit to assure oneself of the rationality of the decision. The final elements is the incentives, which ignites the entity to act or react in a certain manner. The incentives may be a change in price of goods, decrease in supply and change in interest rate or others.
3)
In case of positive economics, the point of discussion are facts, which can be verified. On the other hand, normative economics deals with opinions and perspective of economics, which cannot be measured. As opined by Helfat and Martin (2015), positive economics deals with cause and effect relationship and normative economics deals with judgments and opinions. The nature of positive economic is factual and the nature of normative economics is perspective. Verification of the statement of positive economics is possible as it is data and facts.
On the other hand, verification of the statement of normative economics is not possible as it is subjective and cannot be compared. Example: The GDP of a country can be compared but the work culture in a country cannot be compared. Therefore, the former is an example of positive economics and the latter is an example of normative economics.
4)
Opportunity cost is the cost of the next best alternative, which could have been chosen but was not chosen. It is one of the basic concepts of economics and is called the basic relationship between choice and scarcity. If an employee has an option to join two jobs, however he chooses one of them. According to Wu and Ding (2018), then the job that was not chosen will be the opportunity cost for joining the first job. A rational individual chooses the option that provides him the maximum utility.
Opportunity cost can be computed by computing the difference between the utility from best-foregone option and the utility derived from the chosen option. If the difference is negative, then it is profitable for the individuals as value derived is greater than value foregone. On the other hand, if the value is positive, it is not beneficial for the individual, as the choice of other option would have yield higher utility.
5)
In case of a market economy, the economic activities depend on the behavior of the market that is the demand and supply in the market....