Introduction to Economics

"I want more money! I want the latest edition of the ipod and I must get a new phone, I need to renew my whole wardrobe and i want to own the 30 cart diamond ring! This is all a must, i can't survive without all these being satisfied!" Well, in life you surely are not able to get anything and everything you want or desire to have. There would be obstructions along the way since resources are scarce. For example, you are a billionaire and you are willing to exchange all your wealth for the 30 cart diamond ring, you might not even get it since diamonds are rare and you don't get it just as and when they want to.

There is a conflict between the finite resources and the infinite needs and wants of humans. People cannot have everything they desire so there must be some system of rationing the scarce resources therefore Economics comes in and play a big role.

Economics is the study of rationing systems. It is a study of how scarce resources are allocated to fulfill the infinite wants of consumers.

My dreams is to start up a new line for facial products, This is when economics would be involved. Before i decide to do anything, i will have to consider the 3 basic factor. Firstly, what should be produced and in what quantities? Secondly, how should things be produced? Thirdly, who should things be produced for?

At first, i was hesitating if I should use gold or mud as one my ingredients for my facial products. However, gold are very limited and expensive therefore i have to make a choice and decide how to allocate the limited financial resources hence i will decide and make a choice between the two alternatives. I have chosen to use mud and not gold. Hence when the decision is made, the next best alternative forgone good would be known as the opportunity cost which in this case, the opportunity cost is the gold.

The factors that will involve my new line of facial products is land, labor, capital and entrepreneurship. Land involves the natural resources such as mud and gold as well as the piece of space that my company would be located at. Labor consist of both physical and mental contribution such as my company's workers and sales. The capital would be the investments such as stocks and the value of workforce as well as the machinery. Last but not least, I would be the entrepreneurship of this line of facial products as I will be the one organizing and risk-taking for my company.

In order to keep my line with the society, I would use a production possibility curve to illustrates the concepts of scarcity, choice and opportunity cost. A production possibility curve shows the maximum combination of goods and services that can be produced by an economy in a given time period, If all the resources in the economy are being used fully and efficiently and the state of technology is fixed, I would know that I have a potential output.











An outward shift of PPC can only happen if there is either an improvement in the quality or the quantity in the factors of production. A PPC is a curve because not all factors of production if production used is equally good at both since different people have different talents. For example, some people from my company may be better at making the containers for the facial products while others are better in mixing the ingredients together. Thus if one day I decide to out 50% of the workers from container making over to ingredient mixing, there will be insufficient growth, which will not be pleasant to the company.

In conclusion, in order for my new line of facial products to start up successfully, I have to ensure that utility is high. Utility is the measure of usefulness and pleasure. Total utility is the total satisfaction gained from consuming a certain quantity of product.

Emily Yiu