central problems of an economy

Topics: Economics, Scarcity, Macroeconomics Pages: 4 (1142 words) Published: October 1, 2013
Central problems of an economy
http://www.preservearticles.com/201103104450/problems-of-an-economy.html The world around us is at work. The basic aim of man is to earn an income in exchange of his service. Wants prompt people to work for the satisfaction of wants. Human wants are unlimited. But a particular want in satiable. The cycle of human wants is never-ending. The resources at the disposal of human beings are limited. The wants of the society are unlimited too. But the resources of the society like those of an individual are limited. Scarcity of resources is found in every society, in every economy. An economy is a system by which people get a living and satisfy their wants. Wants being unlimited and resources being scarce we individually and collectively cannot satisfy our wants. This gives rise to the problem of how to use scarce resources to attain maximum satisfaction. This is generally called the economic problem. Scarcity lies at the root of all economic problems. The individual or the society can maximize satisfaction by allocating the scarce resources on satisfying the most urgent wants. They do this by making choices. Such decisions are made continually by the individuals and society everywhere. They all spring from problems concerned with the need for economizing. This is Economics. The problem of choice is the problem of economics. Economics is a science of choice when faced with unlimited wants and scarce resources. Prof. Lionel Robbins, Watson, Stigler, Stonier and Hague C.E. Ferguson and Scitovsky have defined Economics in terms of scarcity. The careful analysis of the scarcity definition of economics point out that human wants are unlimited, the resources to satisfy the unlimited wants are scarce, the scarce resources have alternative uses the problem of choice is the basic economic problem. This forms the core of economics. The economic problem of scarcity of resources and multiplicity of human wants gives rise to four central problems...
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