Because of scarcity, choices must be made by consumers, businesses and governments

For example, over six million people travel into London each day and they make decisions about when to travel, whether to use the bus, the tube, to walk or cycle or work from home. Millions of decisions are taken, many of them are habitual – but somehow on most days, people get to work on time and they get home too in safety if not in comfort!

We are always uncovering of new wants and needs which producers attempt to supply by using factors of production.

For a perspective on the achievements of countries in meeting people’s basic needs, the Human Development Index produced by the United Nations is worth reading.

The economist Amartya Sen (Winner of the 1998 Nobel Prize for Economics) has written extensively on this issue.

Trade-offs and Choices

Making a choice made normally involves a trade-off – this means that choosing more of one thing can only be achieved by giving up something else in exchange.

1. Housing: Choices about whether to rent or buy a home – both decisions involve risk. People have to weigh up the costs and benefits of the decision.
2. Working: Do you work full-time or part-time? Is it worth your while studying for a degree? How have these choices been affected by the introduction of university tuition fees?
3. Transport and travel: The choice between using Euro-Tunnel, a low-cost ferry or an airline when travelling to Western Europe.