ACTIVITIES

MANAGERIAL ECONOMICS (PSEC05)

Name: Alipio, Eugene D. Section: OL33A11 Date: June 04, 2021

1. What is the role of managerial economics?

Managerial economics assist the management in predicting

various economic such as cost, profit, demand, capital, production, price etc. As a
business manager has to function in an environment of uncertainty, it is imperative to
anticipate the future working environment in terms of the said quantities. The
overall role of managerial economics is to increase the efficiency of decision
making in businesses to increase profit.

2. How does scarcity affect our decisions?

The ability to make decisions comes with a limited capacity. The scarcity state
depletes this finite capacity of decision-making. Lack of time or the money scarce, either
of the two produces anxiety that ends in a poor decision. The scarcity of time leads to
procrastination, wherein people tend to do things which are pressing more demand on
them at the priority while holding up to do things which may become worse due to
delay. The scarcity of money affects the decision to spend that money on the urgent
needs while ignoring the other important things which comes with a burden of future
cost. The victim under the scarcity bias (or call it a scarcity trap else wise) is so focused
on meeting the urgent needs that she forgets about the other important needs to be also
taken care. This ignorance leads to the scarcity for tomorrow (the near future). This way,
the vicious cycle of the scarcity is made thus explaining the poverty trap that is
conceding from years together.

3. What causes scarcity?

One of the main causes of scarcity is poor distribution of resources. Often, the
resources are available to meet the needs of a certain population, but the problem is that
they have no way of getting to the people. Scarcity means that human wants for goods,
services and resources exceed what is available. Resources, such as labor,tools, land, and
raw materials are necessary to produce the goods and services we want but they exist in
limited supply. Of course, the ultimate scarce resource is time- everyone, rich or poor,
has just 24 hours in the day to try to acquire the goods they want. At any point in time,
there is only a finite amount of resources available. A rapid increase in demand or a
rapid decrease in supply can result in scarcity.