The Concerns of Economics Assignment Example | Topics and Well Written Essays - 500 words

The Concerns of Economics - Assignment Example The household sector includes all the people who seek to satisfy their needs and wants. They are concerned with consumption and productive resources. The business sector comprises of institutions like corporations, proprietorships and partnerships. These institutions are concerned with combining resources to make goods and services. Their major role is production. The government sector has the ruling bodies of local, federal and state governments. The government plays a vital role in regulation through collection of taxes, passing of laws, and forcing other sectors to do their work. The government also buys domestic products as their purchases. Additionally the foreign sector is a combination of everything and everyone; governments, households and businesses beyond the domestic boundaries. Its function is to buy exports and produce imports which are calculated as net exports. A production possibility model is a curve used to analyze alternative combinations of goods that can be produced by an economy within a given time period and with existing technology and resources at that time (AmosWEB LLC, 2013). Production possibility models are an insight into the basics of economics. For the curve presented above the goods are storage shed and crab puffs. A production possibility analysis is undertaken because it answers the â€Å"what† question in resource allocation as scarcity commands that the community has to choose from various goods to produce. It introduces graphical analysis which is essential in interpreting terms like opportunity cost and unemployment. A possibility model illustrates basic concepts in economics. However, this model assumes that resources and technology are fixed. It does not provide information on desirability and satisfaction of the goods. This is not good for the economy as it might produce a good that is not wanted. The grea test level of consumer satisfaction can not be determined. Countries trade because they have different