Economics for Business: Resource Scarcity, Opportunity Cost, Cost Benefit Analysis and Incentives

This report discusses the impact of resource scarcity and opportunity cost on microeconomics decision making in the UK. It also explores the use of cost benefit analysis and incentives in household decision making, and how market economy uses consumer habits to influence buying decisions.

ECONOMICS FOR
BUSINESS
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Task 1...........................................................................................................................................3
Task 2...........................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Economics for business include the concept of economics applied in business. This report
will discuss about the certain concepts related to business economics. Henceforth, report will
emphasis on the fact that how resource scarcity and opportunity cost will have an impact over
microeconomics decision making for the household and individual who are based in the United
Kingdom. Different examples will also quote of last three years related to the UK economy and
social environment. Challenges associated with resource scarcity and opportunity cost.
Furthermore, cost benefit analysis and incentives impact on household decision making in UK
will also address. How the market economy addressed uses consumer habit will discuss in
context to cost benefit analysis and incentives in business will also be discussed in this project.
MAIN BODY
Task 1
Resource scarcity is defined as a situation demonstrates the lack of availability of the
resources for the livelihood of the people in country. This is a situation where the resource
limitation is there which do not allow the people of country to live or maintain the whole life.
This is like a fundamental idea associated with studying the economics. This is a situation where
the demand of product in the country is more than the available resources which do not allow the
government to cope up with the requirements of people based in the country. Government is not
in a position to meet up the needs and requirements of the people of country which create a
resource scarcity situation. The situation of resource scarcity may further lead to unsustainable
growth of economic position of country and also rise in inequality due to the fact that prices will
go high of all the products available in the market. Only the rich people will get to meet the
supply of all their needs and requirements of the necessity products and goods. The direct impact
of the resource scarcity is over the household and individuals based in the country. All such
households contain the stability in term of economics and finances will be able to survive in this
situation but all such people who are not economically well stable or financially well in term of
stability will suffer allot in this situation. Resource scarcity not only stuck to the food but it
belong to any kind of resource requirements such as medication, food, clothing and any other
kind of necessity of people. Resource scarcity is a very dangerous situation that may lead to
some massive side effects in the society. This creates an imbalance in the society in term of
resource requirements and the availability of the actual resources in the society.
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Resource scarcity is a very challenging situation for the government and all other key
stakeholder groups. This directly indicates and demonstrates a fact that there will be lack of
resource to meet the overall need and requirements of the people across the country. For example
recently during the time of covid pandemic the situation related to the resource scarcity has seen
by the people in United Kingdom. Pandemic situation could impose lockdown that could shut all
doors of factories and other premises. The result of that is in the form of lack of food, health
equipments also lack, not a proper space was there for the patient in hospitals as the beds were
only limited by the demand was huge, oxygen slender was also unavailable as compare to the
requirements and such related challenges are faced. In the last three years since 2019 pandemic
came across the society. The entire situation could completely change the view point of the
whole society. Thousands of people in United Kingdom left died due to lack of food, sanitization
issues and virus infection. Resource scarcity was at its peak in the last three years not only in
United Kingdom but globally as well. Production was stopped that could not meet the supply
requirements of the people. Many individuals who just lie alone faced the issues like depression,
loneliness and such other challenges as there was no one to give a support to such individuals in
the country. Resource scarcity is a very tricky situation as it completely scare and change the
whole situation of the nation.
Opportunity cost on the other side also created its impact in the micro economics
situation of United Kingdom. Opportunity cost is defined as such cost that is incurred indirectly.
In economics there is not any direct expense called as an opportunity cost. This is an indirect
nurture of expense face by the society. This is a cost incurred for eliminating a certain option in
order to select any particular option. While selecting the best option stakeholders have to skip
certain options or alternatives so that they can select and go for just one particular option. Rte
cost of skipping such choices in order to meet certain and particular requirements is
demonstrated as the opportunity cost of capital. Identifying a suitable alternative that can provide
higher returns to the stakeholders. The opportunity cost of capital also creates an impact over the
microeconomics. Selecting a particular strategic option is a risky process as all is done based on
the speculations. Stakeholders take risk while selecting a particular choice or option. In the last
three years since 2019 government was required to make many decisions to advance its health
care industry by taking some strong decisions. In such a process other sector could lack at some
level as a part of the opportunity cost of capital. Opportunity cost of capital creates a direct
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impact over the growth and development of the society as a whole. Recently pandemic situation
could create a massive amount of damage in the society. Opportunity cost on the other had could
influence economically, socially and such other manner to cause the limitation in term of
development and growth of the society as a whole. For example in United Kingdom due to the
major focus of the government towards the development of the health care industry other sectors
like hospitality, automobile may suffer. The opportunity cost of capital could completely
unstable to the economic activities of other such respective sectors like hospitality industry,
automobile industry and many more.
The biggest challenge society has faced s areas to the resource scarcity and opportunity
cost of capital lack of strategic direction towards the growth and betterment of other respective
sector of business environment. This is anticipated that resource scarcity and opportunity cost
could further lead to a challenge like instability in the society. There is a difference found in the
society between the people having proper financial resources and the people who are not
economically in a very greater and stable position (Krugman and Wells. 2020). Due to the
resource scarcity and opportunity cost the inequality could arise in the society. Facilities are only
going to the people are economically in a very sound position. The instability is also one of the
greatest challenge society is facing. People who are poor are not being able to meet up their daily
requirements and needs in the society. This situation is very scary in the United Kingdom as the
difference can easily find between the poor people and the rich people. Due to the resource
scarcity and opportunity cost of capital inequality could arise in the economy which could further
lead to the instability in the economies. Differences between the rich and poor are getting more
challenges in the society. More number of crimes in United Kingdom demonstrate one of such
challenge associated with the resource scarcity and opportunity cost. As the poor people are not
in a position to meet their needs and demands which could further enforce them to commit
certain crime or criminal action. Opportunity cost also creating an education related challenges in
society as well. Poor people are not able to educate the children’s in such a way rich people are
doing in society. This cold further inflecting to the life style and standard of living of the people
in United Kingdom. Today there are thousands of people in United Kingdom who live on the
street and are not in a position to feed them. Overcoming these issues is a major challenge or
issue society is facing.
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Task 2
Cost benefit analysis is a practices adopted in the cost accounting in which overall
estimated cost on the project is identified and estimated benefits also determined in this process
to know whether the project is profitable enough or not. This entire evaluation is based on two
different aspects one is estimating the overall cost and the other one is to determine the total
estimated benefits organisation will occur over the project. This entire process plays a very
significant role in analysing the significance of the project. Households and individual use this
technique primarily while making any decision. This technique allows the individual to
determine and identify the cost that is supposed to incur over the project. Microeconomics
decision making involve taking out various decisions that can support the individual and
households to make important decisions related to investment, selecting certain project and such
related decisions.
Decision making of the households and the individual is totally based on the concept of
cost benefit analysis. This is important that an individual or households use this practice so that
different decisions can be taken more strategically. Many times individual and households need
to select project among different project options available. For example in case of selecting any
investment decision or option. Out of many option individual and household can only go for one
or two options and rest of the options has to skip by the stakeholders. Cost benefit analysis
involve the fact that while selecting the particular investment option an individual and household
need to interpret the total cost that is expected to incurred over the project and the total estimated
amount of the benefits hose hold will entertain and individual will enjoy out of selecting any
particular choice or option. Cost benefit analysis is a very effective and efficient technique that
are used by the household and individual to take various decisions and select certain and specific
proposal or option for further development and growth as an individual and household.
Inceptive is another effective term associated with the economics. For individual and
household incentives is the basis of selecting any particular project or proposal. Incentive are the
financial advantage and benefits individual and household make by selecting any particular
choice or option. The role of incentive is very crucial for the individual and household as this is a
direct cost benefit earn. All the various decisions individual and household make depend upon
how much incentives are there in the respective and particular decision that has been taken by the
person or individual. In the past three years after the year 2019 various changes in the society is
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seen. Covid pandemic was there that could completely damage to the social condition of the
society. Many people could lose their respective jobs, businesses got shut that could also damage
to the economy along with the individual and households. All these changes are seen in the last
three years 2019, 2020 and 2021. Incentives from the side of government could provide a
significant economic advantage to all the individual and household due to the fact that in last
three years income of the people got affected immensely. All these could completely influence
and affect to the micro economics decision making of the society. Both the techniques cost
benefit analysis and incentives could allow the individual and household to provide a certain
significant advantages to all people part of the society.
Market economy utilise the consumer habit to influence the decision making of the
customers in the market. Cost benefit analysis is all about taking the decision on the basis of the
estimated cost incurred over the projected the potential amount of benefits and advantages that
will arrive out of the decision that is made. Market economy try to attract the entire potential
advantage customer will gain against making any such decision in order to influence to the
buying decision of the customers. The market economy also tried to utilise the incentive policy
by providing several offers related to membership, commission and such other to influence the
marketers in the market for channelizing the customer decision making process (Young, 2021).
Marketers usage these techniques to influence the customer decision making process and not
earn further extra profits and benefits in the business. Cost benefit analysis and incentive both
these techniques play a significant role to gain competitive advantage in the market. These
practices could direct to the organisation to provide more materialistic advantages and benefits to
the people so that they can take the decision to influence the customer decision making and
further to gain extra profitability in business. Market economy try to use the customer habit
which allocating the cost benefit analysis and the incentives, They provide such incentives that
can go by the habit and interest of the customers in respective market. Market economy uses the
customer habit to influence the buying behaviour of the target customers in market.
Both the concepts cost benefit analysis and incentives favour the organisation to
influence the buying behaviour and decision making of the potential customers in market. This
would significantly influence to the purchase decision making of the target customers in the
market. Customers always hold the desire to gain significant benefits and advantages that may go
by the taste and preferences and which can significantly improve the buying power of the
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potential customers in market. Marketers try to provide as many benefits in different forms such
as membership, incentives, discounts and such other advantages to influence the buying
behaviour of the potential customers in the respective target market. Business profits are highly
based on the fact that how efficiently customers of the organization are indulged with the
operations and functions perform by the organisation. Cost benefit analysis and incentives are the
two core techniques that support to the marketers for influencing to the buying joinery of the
potential customers in respective target market. Marketers try to highlight only such advantages
that can affect to the buying behaviour of potential customers in market.
CONCLUSION
Resource scarcity is one of the very serious cause faces by the society. This entire issue
created a significant disadvantage in the market. Inequality also aroused in the market that could
create a significant inequality in the society. Many people could escape from coping up all their
needs and requirements due to lack of availability of optimum amount of resources in the
society. Marketers try to provide a significant level of advantages and benefits to the customer
sin market in the form of cost benefit analysis and incentives that can significantly influence to
the buying decision of potential customers in market.
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REFERENCES
Books and Journal
Krugman and Wells. 2020. Essentials of Economics: Chapter 1.
New York: Worth Publishers. *Young, M. 2021 Lecture 1: First principles - The market
economy. MOD3327 Economics for Business. Anglia Ruskin University of London.
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