Sunday, November 17, 2019

Economics is said to be concerned with the central problem of scarcity Essay

Economics is said to be concerned with the central problem of scarcity and infinite wants - Essay Example The three basic factors of economics are scarce in nature and thus they initiate the necessity of taking up a research approach on the factors that influence the problem in the economies. Along with the discussion on the factors that create the problem, the role that market mechanism plays in sorting the problem will be reviewed in this research paper as well (Case & Fair, 2004). 2.0 Explanation of the Research Statement The explanation of the research statement that considers economics to be concerned with the central problem of scarcity and infinite wants will be presented in this section of the research paper. 2.1 Problem of Scarcity The problem concerned with scarcity is considered to be the most essential in the arena of economic. The problem is derived on the basis of the assumption that goods or resources are finite whereas, desires of the human beings are infinite. The concept of economics is concerned with the alternatives and their outcomes and concentrates on means through which societies and individuals make allocation of their finite resources for trying to satisfy the infinite wants relatively (Lipsey & Chrystal, 2007). Scarcity takes place because the relatively infinite wants of the individuals cannot be completely set-off from the utilisation of limited resources that are available. A good becomes scarce if individuals and society cannot access them freely and thus the good directs a positive price. The problem of scarcity influences all the decision makers to resolve three basic questions of the economics: What will be manufactured? How the process of manufacturing will take place? Who will be using the goods that will be manufactured? Source: Mankiw & Taylor, 2006. Goods are the answers to the first question. Production is the answer to the second question that occurs when technology and knowledge are used for application of the energy to objects for making them more valuable. The alternatives’ opportunity cost provides answer to the t hird question which is measured by the qualitative value of the best alternative that is sacrificed (The University of North Carolina, 2011). 2.2 Model of the Economic Problem of Scarcity The model of the problem of scarcity largely depends on the factor of efficiency. The workers, individuals, business houses, governments or the countries are normally faced with the problem of scarce economic resources. The level of efficiency is important for finding solution to the particular economic problem in concern and is measured by the factors as to how well the dwellers produce goods or services. Efficiency is also determined by the factors through which goods or services are produced at a lower cost or less resource are utilised for manufacturing a product or rendering service along with satisfying the wants of the consumers at the same time (SG Zilina, 2010). Source: (SG Zilina, 2010). The above model is a comprehensive depiction of the economic problem of scarcity that has shown the ev olution of the economic problems of scarcity and has even laid the way towards the resolution of the problem. The entire model is centrally located to the choices that the dwellers of the economy make for enhancing their level of efficienc

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