You have unlimited wants and limited resources to satisfy them. Explain by giving two examples.
You have unlimited wants and limited resources to satisfy them. Explain by giving two examples.
The problem of scarcity is the most basic economic problem. Human wants are unlimited and resources to satisfy these wants are limited and these limited resources have alternative uses. 'Scarcity of resources' implies that there are unlimited wants to be fulfilled by limited resources which leads to the lesser supply of resources as compared to the demand for them.
The basic concern of an economy is to allocate the scarce resources to the best possible use in order to satisfy maximum wants. The limited resources have alternative uses which along with the problem of scarcity makes it necessary for an economy to make a choice among various alternatives.
For example, an economy endowed with a given level of resources has to make a choice between the production of capital goods and consumer goods. The choice of the economy (i.e., what to produce and in what quantities) depends on the need of the economy. While the production of consumer goods will hamper the capital formation in the country for future production, the production of capital goods will not provide sufficient goods for consumption to the present population.
The same problem of scarcity can be felt at an individual level. e.g., with a given amount of money say, 10,000 Rupees, one cannot buy a refrigerator and a washing machine simultaneously. Thus, the individual needs to make a choice between the alternatives according to his/her priority.
The problem of scarcity is the most basic economic problem. Human wants are unlimited and resources to satisfy these wants are limited and these limited resources have alternative uses. 'Scarcity of resources' implies that there are unlimited wants to be fulfilled by limited resources which leads to the lesser supply of resources as compared to the demand for them.
The basic concern of an economy is to allocate the scarce resources to the best possible use in order to satisfy maximum wants. The limited resources have alternative uses which along with the problem of scarcity makes it necessary for an economy to make a choice among various alternatives.
For example, an economy endowed with a given level of resources has to make a choice between the production of capital goods and consumer goods. The choice of the economy (i.e., what to produce and in what quantities) depends on the need of the economy. While the production of consumer goods will hamper the capital formation in the country for future production, the production of capital goods will not provide sufficient goods for consumption to the present population.
The same problem of scarcity can be felt at an individual level. e.g., with a given amount of money say, 10,000 Rupees, one cannot buy a refrigerator and a washing machine simultaneously. Thus, the individual needs to make a choice between the alternatives according to his/her priority.
