Basic Economic Problems Essay

We run into scarcity because while resources are limited, we are a society with unlimited wants. Economics is the study of production, distribution, and consumption of goods and services.If society did not have to make choices about what to produce, distribute, and consume, the study of those actions would be relatively boring.

Let's take two scarce goods - shark meat and chicken.

Both have a non-zero cost/price, but we would all agree shark meat is much more expensive to buy than chicken. The resources to produce shark meat are largely limited by the labor and capital it takes to catch a shark, while the labor and capital required to produce chickens is less limiting.

Factors like production costs and labor affect the cost of scarce items.

If the unlimited wants and needs of a particular good can be met by resources, then it is not considered scarce. Can you think of something you consume or use that is free? It is a good that everyone has unlimited access to, and no one has to pay to consume it!

Therefore planning authority keeps this objective in mind while choosing a technique of production.

As a member, you'll also get unlimited access to over 79,000 lessons in math, English, science, history, and more.(i) The decision of what to produce and in what quantities is carried out on the basis of national priorities.(ii) In a socialist economy the main objective is to ensure full utilization of resources.A PPF is a graph showing the possible production combinations of two goods given limited inputs. Society can produce two goods - gadgets or widgets.The downward sloping line shows how many gadgets and widgets it can produce given the amount of labor available.Without scarcity, the study of economics would not exist because we would produce, distribute and consume everything to meet all of our needs.There would be no choice about consumption because it would be unlimited.Why does it cost money to produce and consume the goods society wants? Through this lesson, you will gain a better understanding of the concept of scarcity and why it forces us to make decisions and trade-offs everyday. We have to do those things because resources are limited and cannot meet our own unlimited demands.Scarcity, or limited resources, is one of the most basic economic problems we face. Without scarcity, the science of economics would not exist.A good is considered scarce if it has a non-zero cost to consume. Almost every good we consume as individuals, or as a society, costs something and is scarce. Therefore, scarcity creates a need for decisions and trade-offs to be made.Why are some scarce goods more expensive than other scarce goods? One good may be more scarce than another, either because of limited resources or higher want (demand) for that good.