Question

In: Economics

How would an economist react to the following statement? “Rich nations like the United States are...

How would an economist react to the following statement? “Rich nations like the United States are lucky that they are not burdened with the problems of scarcity and choice.”

Solutions

Expert Solution

An economist will react very sharpely to the statement that "Rich nations like the united states are lucky that they are not burdened with the problems of scarcity and choice" because the statement is wrong and in real, every economy, whether it is rich or poor, exists because of one reason only which is, how to overcome the problem of scarcity and choice.

Scarcity makes people give up something in favour of other which is known as choice and any economy cannot have everything. Scarcity is the driving wheel of the economy which states that the resource are limited and we have to make a choice of what ,why, for whom and how much to produce.

The goods such as oil are limited in supply and we can only use as much while the stock lasts.The good has alternative uses and an economy must make a choice as to what use,it wants to use the good for ultimately.

The rich status of an economy only means that the country has been able to tap the potential of the inputs which are scare in nature to produce an optimal quantity of output and that a country has been able to perfectly allocate the resources to achieve efficiency. This has in result, increased the standard of living and per capita income of the country.


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