Scarcity means that human wants for goods, services, and resources exceed the available supply (the opposite of scarcity is abundance). Scarcity also includes an individual’s lack of resources to buy commodities. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. …

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In economics, a commodity is a basic good or service that is interchangeable with other goods of the same type. A commodity must be easily storable over time, that is, not lose its original characteristics. The high standardization that characterizes a commodity allows it to be easily negotiated on international markets.

Budget constraint

In economics, a budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. There are two major differences between a budget constraint and a production possibilities frontier. The first is the fact that the budget constraint is a straight line. This is because …

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In economics, demand is an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service during a given period of time. In economics, the law of demand states that the quantity demanded and the price of a good or service is inversely related, …

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Inflation is a general and ongoing rise in the level of prices in an entire economy. Inflation does not refer to a change in relative prices. A relative price change occurs when you see that the price of tuition has risen, but the price of laptops has fallen. Inflation, on the other hand, means that there …

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Employment is a relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for-profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee. Human labor is one of the most important resources which need effective utilization – “almost” …

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Allocative efficiency

The paradigm of allocative efficiency assumes that producers are only supplying goods that the market wants, i.e. products that are in high demand. In mathematical terms, it is the point at which price is equal to the marginal cost (the cost of producing one more unit of particular produce). Some allocations are inherently better than others in …

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