Scribd
Upload
36 views

The Economic Problem

The document discusses the economic problem of scarcity. It defines scarcity as having unlimited wants but limited resources to meet those wants. This means not all wants can be satisfied and resources must be allocated efficiently. Every society must determine what to produce, how to produce it, and who the production is for in order to most efficiently use scarce resources.

Uploaded by

Jeffrey Cardona
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
36 views

The Economic Problem

The document discusses the economic problem of scarcity. It defines scarcity as having unlimited wants but limited resources to meet those wants. This means not all wants can be satisfied and resources must be allocated efficiently. Every society must determine what to produce, how to produce it, and who the production is for in order to most efficiently use scarce resources.

Uploaded by

Jeffrey Cardona
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 9

The Economic

Problem

Scarcity
Scarcity refers to the problem of fundamental unlimited human wants in a
world where there are only limited resources.

Scarcity
Scarcity, then, is defined as
1. Unlimited Wants

2. Limited Resources

Scarcity
Thus, the main problem of economics is the allocation of resources in light of
the fact of scarcity. There are wants competing to be satisfied by the limited
resources, for example, every person wanting to attain a high standard of
living, but everyone owning mansions and living the high life is impossible
due to scarcity

Efficiency
Since goods are scarce, the resources must be used in a way that would
satisfy the most wants. This concept is called efficiency.

Acknowledge the reality of scarcity


and then figure out how to organize
society in a way which produces the
most efficient use of resources.

Efficiency
Every society must have a way of determining: WHAT commodities to
produce, HOW these goods are made and FOR WHOM they are produced.

What to produce?
WHAT commodities to produced and in
what quantities?
Will we use scarce resources to produce more
consumption goods?
Or will we produce fewer consumption goods
and more in investment goods?
Which will boost production and consumption
tomorrow?

How to produce?
HOW are goods produced?
Who will do the production? With what
resources and what production techniques
they will use?
Robots or people? Coal or oil?

For whom to produce?


FOR WHOM are goods produced?
Who gets to eat the fruit of economic activity?
Is the distribution of wealth fair and equitable?
How is the national product divided among different
households?
Are many people poor and a few rich? Will society
provide minimal consumption to the poor or must
people work if they are to eat?

You might also like