Essay explaining the quantities of goods and services that we can produce with limited available resources The fundamental problem of economics is scarcity meaning economic resources are insufficient to meet the daily needs and wants of the individuals. Economic resources refer to the factors of production, which includes the following Natural Resources, Labour, capital and Entrepreneurship. The scarcity of resources is fundamental to economics. There are not enough resources to meet the needs of consumers and produce. There is not enough to go around satisfying the potential demand. In the case of producers, there are four scarce resources: (i) (ii) natural resources capital-e.g. equipment and tools (ii) labor (iv)
enterprise or entrepreneurship
Scarce resources mean that producers cannot make unlimited quantities of goods and services. These are types of resources or factor of production. Since resources for production are scarce and there are not enough goods and services to satisfy the total potential demand, choices must be made. Choice is necessary because resources are scarce. Producers must choose how to use their available resources and what to produce with them. Suppose, to take a simple dimensional example that a society can spend its money on two products, computers and cabbage. The society’s resources are limited; therefore there are restrictions on the amount of computers and cabbage that can be made, which can be shown by a production possibility curve or transformation curve. By devoting all our time and other resources to manufacturing computers, we can produce 5 computers per working day. On the other hand, if we spend all our production time gardening, we can produce 100 kilograms of cabbages per working day. It is possible for us to produce either 5 computers or 100 kilograms of cabbage, but in each case the entire production of the other good must be sacrificed. The only way that we can enjoy both which includes both computers and...
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