4 assumptions in PPC, Concepts & Systems Q1

An economic system is a system of production, resource allocation, and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community. As such, an economic system is a type of social system.

Ref:

Wikipedia search 'economic system', available at

https://en.wikipedia.org/wiki/Economic_system

b) 4 assumptions of Production Possibility Curve (PPC)

The production possibility curve is based on the following Assumptions:

(1) Only two goods X (consumer goods) and Y (capital goods) are produced in different proportions in the economy.

(2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them.

(3) The supplies of factors are fixed. But they can be re-allocated for the production of the two goods within limits.

(4) The production techniques are given and constant.

(5) The economy’s resources are fully employed and technically efficient.

(6) The time period is short.

Ref:
http://www.yourarticlelibrary.com/economics/the-production-possibilities-curve-assumption-uses-or-application/10531/

(c) Concepts with example in relation to real estate

(i) Scarcity

Scarcity (also called paucity) is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. Scarcity is at the core of economics, because without this concept macroeconomic and microeconomic research would be rendered meaningless.
In real estate, the concept of scarcity is very prominent. Real estate is a limited resource. Land - for that matter - space, is a limited resource. There is a finite supply of land, or space. Although we can build skyscrapers, the likelihood that it is still a limited economic means to build that space, meaning there is never ending supply of land or space.

Ref:
https://en.wikipedia.org/wiki/Scarcity

(ii) Choices

The limitation of resources - or scarcity, is the beginning of making a choice. This scarce resource, be it a plot of land, would be utilized for a purpose over another. The parcel presents us with several alternative uses. We could build a house on it. We could put a gas station on it. We could create a small park on it. We could leave the land undeveloped in order to be able to make a decision later as to how it should be used.

Suppose we have decided the land should be used for housing. Should it be a large and expensive house or several modest ones? Suppose it is to be a large and expensive house. Who should live in the house? If the Lees live in it, the Nguyens cannot. There are alternative uses of the land both in the sense of the type of use and also in the sense of who gets to use it. The fact that land is scarce means that society must make choices concerning its use.

Ref:
https://catalog.flatworldknowledge.com/bookhub/21?e=rittenberg-ch01_s02

(iii) Opportunity Cost

It is within the context of scarcity that economists define what is perhaps the most important concept in all of economics, the concept of opportunity cost. Opportunity cost is the value of the best alternative forgone in making any choice.

[In an airplane, when meals are offered - nasi lemak or pasta, the opportunity cost of nasi lemak is the enjoyment of pasta. The choice determines what is the opportunity lost. Using the same unit of time to sleep instead of working on a RM20 per hour job is the opportunity cost of the sleep!]

The concept of opportunity cost must not be confused with the purchase price of an item. Consider the cost of a college or university education. That includes the value of the best alternative use of money spent for tuition, fees, and books. But the most important cost of a college education is the value of the forgone alternative uses of time spent studying and attending class instead of using the time in some other endeavor. Students sacrifice that time in hopes of even greater earnings in the future or because they place a value on the opportunity to learn. 

Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice.

[For example, the opportunity cost of choosing to buy a condominium (strata property) over a single-storey landed house is the value in land appreciation of that landed house, its garden and compound, and even the little chicken farm at the backyard! It is foregoing this opportunities that a condominium is bought. As strata property does not have land, garden and compound at the backyard, so some benefits are lost.

Buying the condominium means losing the opportunity to own the land, gardening and the little chicken farm. On the other hand, the opportunity cost of buying the single-storey house is the enjoyment of the condominium. Its swimming pool, gym, tennis court, beautiful common garden, etc.]

Ref:
[x] Own account.
https://catalog.flatworldknowledge.com/bookhub/21?e=rittenberg-ch01_s02