2.0 Introduction

Learning Objectives

At the end of this chapter, learners will be able to:

  • Describe how market systems work
  • Analyze Production Possibilities Frontier (PPF) and opportunity cost
  • Explain Comparative Advantage and Trade

In 1968, the Rolling Stones recorded “You Can’t Always Get What You Want.” Economists chuckled because they had been singing a similar tune for decades.

English economist Lionel Robbins (1898–1984), in his Essay on the Nature and Significance of Economic Science in 1932, described not always getting what you want in this way:

The time at our disposal is limited. There are only twenty-four hours in the day. We must choose between the different uses to which they may be put. … Everywhere we turn, if we choose one thing, we must relinquish others which, in different circumstances, we would wish not to have relinquished. The scarcity of means to satisfy given ends is an almost ubiquitous condition of human nature.

Because people live in a world of scarcity, they cannot have all the time, money, possessions, and experiences they wish. Neither can society.

This chapter will continue our discussion of scarcity and the economic way of thinking by introducing the critical concepts of Production Possibility Frontier (PPF), Opportunity Cost, and Comparative Advantage as the basis for international trade.

Attribution

“Chapter 2 Introduction to Choice in a World of Scarcity” in Principles of Economics 2e by OpenStax is licensed under Creative Commons Attribution 4.0 International License.

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Principles of Macroeconomics Copyright © 2023 by Sharmistha Nag is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.