Have you ever wondered why we chose for alternative options when we could actually have opted for a better choice? The reason of the same is the scarcity. This holds the basic fundamentals that state the facts of dominants in the globe. Scarcity is very natural and universal which is, in fact, faced by flora and fauna as well.
Let’s talk about the activities and leisure services that an individual wants to enjoy:
How about time? If people were offered more than 24 hours, following is a general list that people could have wishes to do:
But does it really happen the way you think? If course not! People are bound with a particular income every month that can afford only few choices under their basket. How about those taxes you pay? Taxes that you pay to the government generally lower your income in order to build better resources for the general public by the government. Taxes are the major source of resources that can be availed to the society. So basically, it is a portion of your income that you lose in order to contribute to the better development of the country.
Since you can’t afford everything because of lack of time and income, you start making choices. For example, you wanted IMac as well as IPhone, but you chose to buy phone only because of budget issues under your income. The same is valid for the government as well; Taxes paid to the government cannot be spent on environmental protection as well as needs in national defense. And therefore, government also faces the scenario of choosing one from both.
Talking about an incentive; it is basically a reward that motivates an action and penalty that demotivates one.
Considering prices as incentives. Now suppose, if the price of an IPhone is higher, the quantity will be offered more for sale compared to the people who are willing to buy the same. If the price e is lower, the quantity will be fewer to choose from than the number of people looking for an IPhone. But such a situation will not declare a sustainable result and therefore choices will be made between buying and selling at a consistent platform.
The study of such choices are considered n Economics subject which are not restricted to an individual but includes businesses, societies, governments that faces the issue of scarcity which give rise to choices that are dependent on the availability of resources. Economics is divided into two parts: