Question

Jean Tirole in economics for the common good discusses various methods outside of markets to approach the issue of scarcity. What are these methods and are all of them inefficient? How does this compare with the ideas discussed in Tim Harford (The Undercover Economist)?

Answer 1

Meaning of Economics-: Economics is the subject in which we study how to used scarce resources to fulfill unlimited wants. Scarce resources are the limited resources that are available in the economy and which have alternative uses.

Meaning of Scarcity-: Scarcity means when something is limited. In economics when we are talking about scarcity it means when the resources are limited in the economy.

Jean Tirole is the Nobel Prize winner in Economics. He is pressing economic issues and ranging from regulation to digital economies to finance.

Scarcity is the foundation of the essential problem of economics because here resources are limited and wants are unlimited.

The resources which are limited to its price is also high as compared to other freely available resources.

There are 3 Method to deal with the problem of Scarcity that is-

1. Economic Growth-: Economic Growth increases the ability to produce goods. When there are more goods produce it means that we have more resources, more technologies, Better technologies which help in reducing the problem of Scarcity.

2.Reduce our wants-: Reducing want is also another way to reduce the problem of scarcity. If wants are reduced it leads availability of scarce resources so, it helps to short out the problem of scarcity.

3.Use our existing resources wisely-: It means that Don't waste those few resources which we already used them in an optimum way so, they can help to maximize our satisfaction level.

4 ways that societies can use their EXISTING resources to reduce scarcity are:

1. Productive Efficiency
2. Allocative Efficiency
3. Full Employment, and
4. Equity

These all method are efficient also and inefficient because In real-world human wants are never ended.there desire, need and wants are raising daily. If one desires fulfilled another desire created and in the economy the resources which are limited means scarce. And scarce resources have high prices also.so, it is difficult to control human wants so, that's why these are not fully efficient. They are inefficient in some cases.

Tim Harford Who is The Undercover Economist. According to him Resources which are scarce charges high price but it also depends on another factor Choice of the consumer. Because different goods have different prices. It depends on consumer choice. Sometimes, the consumer is willing to pay more which he wants more. So, he is mainly talking about the problem of choice where the price of goods is chosen where the consumer is willing to pay more for the goods he chooses and Jean Tirole talking about Scarcity that resources are scarce and limited that why the goods price are high because they are limited.