Question

What are "scarce resources" and how do we compensate for the use of these resources? Explain why we need efficient allocation of scarce resources as opposed to effective allocation. Define economics

Answer 1

Answer
Scarce resources are defined as fewer amounts of resources in comparison to unlimited want. We define them as scarcity of resources in which you are unable to satisfy the all the wants at a time but you have to prioritize them according to resources. We have to make choices and then allocate resources on priority basis. We have to take decision that help us to fulfill our important needs at first then the less important.

We need efficient allocation of scarce resources as opposed to effective allocation, because efficient and effectiveness both are different but use same resources in terms of accomplishment the work. Efficient allocation is made possible using fewer amounts of resources and generating more output, it leads to cost minimization in terms of resources and produce good amount of output. But opposite to it we have to allocate more resources without considering their efficiency but just to produce output, it may lead to increasing cost condition. So we are concern with efficient allocation of resources than the effective allocation.

Economics is defined as economic activities that are done by people to earn their living or livelihood. economics includes various activities like consumption, production, investment and saving that are done by people of country to produce , exchange goods and service. it also includes various transactions that take place in the economy to run the various sector like primary, secondary and tertiary.