what is change in your view on using scarce resources and how?

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Expert Solution

Ans) Scarcity arises when there are limited resources (be it natural, man made, money etc) and unlimited wants. Everyone, thus, has to make a choice. Choice involves opportunity cost because one has to leave something in order to get something else.

After studying economics, I am now able to under the concept of opportunity cost. So, while making decision about using scarce resources, I will see which option has lowest opportunity cost. And will choose the one with lowest opportunity cost.

From this arises the concept of comparative advantage. Which states that person should do the work in which he/she is best at i.e the work with lowest opportunity cost.

Utility also plays an important role in deciding what should be done. The option with more marginal utility is desirable.

Further, I also understand the concept of marginal cost and marginal benefits. If marginal benefit of any activity exceeds marginal cost, then only it should be done otherwise not.

Therefore, scarce resources must be allocated in such a way that it is allocated to its highest valuer.

Rahul Sunny answered 1 year ago

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