Scarcity and Choice
The purpose of economic activity
The main reason behind all kinds of economic activities is the human wants which are not only unlimited but at the same time of ever changing nature. For this the wants are supplied by producing goods or services. However, the resources on earth for production to fulfill those wants of human beings are quite limited. As a result, there are four kinds of problems arising out of these.
These problems can be put under four questions, which are:
• What to produce?
• How much to produce?
• How to produce?
• For whom to produce?
Scarcity
Every society or economies of the world has to decide on these four questions. The first question of what to produce arises because of the limited resources for production and multiple uses of them. For example, wood can be used for the purpose of making furniture or used as a fuel for cooking purpose. Therefore, it is important to decide for what purpose the goods are to be produced. Secondly, another question that arises due to the scarcity and multiple use of a resource, is how much to produce? This is quite similar to the previous question and relates to it. When what to produce question is answered the how much to produce question arises because in most cases both goods are required to be produced so the perfect balance of both the goods are to be produced. Another question that arises due to scarcity of resources is how to produce? General norm is to produce using that method which is the best to save the resources and give the maximum yield. Finally, the question of for whom to produce is asked which is again because of limited resources. The resources are limited so production is also limited, so it is to be decided who is going to get the goods that have been produced.
How scarcity influences choice?
It is because of the scarcity that we have to choose between different alternatives. In the question of what to produce those goods or services are produced that have the demand.
The main reason behind all kinds of economic activities is the human wants which are not only unlimited but at the same time of ever changing nature. For this the wants are supplied by producing goods or services. However, the resources on earth for production to fulfill those wants of human beings are quite limited. As a result, there are four kinds of problems arising out of these.
These problems can be put under four questions, which are:
• What to produce?
• How much to produce?
• How to produce?
• For whom to produce?
Scarcity
Every society or economies of the world has to decide on these four questions. The first question of what to produce arises because of the limited resources for production and multiple uses of them. For example, wood can be used for the purpose of making furniture or used as a fuel for cooking purpose. Therefore, it is important to decide for what purpose the goods are to be produced. Secondly, another question that arises due to the scarcity and multiple use of a resource, is how much to produce? This is quite similar to the previous question and relates to it. When what to produce question is answered the how much to produce question arises because in most cases both goods are required to be produced so the perfect balance of both the goods are to be produced. Another question that arises due to scarcity of resources is how to produce? General norm is to produce using that method which is the best to save the resources and give the maximum yield. Finally, the question of for whom to produce is asked which is again because of limited resources. The resources are limited so production is also limited, so it is to be decided who is going to get the goods that have been produced.
How scarcity influences choice?
It is because of the scarcity that we have to choose between different alternatives. In the question of what to produce those goods or services are produced that have the demand.