Question

What are the way to narrow the scarcity gap?

Plz show it short and clearly.

Answer 1

Scarcity is the limited availability of resources. And by the allocation of limited resources in the economy to fulfill the unlimited wants, we can reduce the security gap. The scarcity gap can be narrowed by focusing on the Central Problems of an economy, which are:

1. WHAT to Produce.
2. HOW to Produce.
3. FOR WHOM to Produce.

WHAT to Produce helps in resolving the problem what goods to be produced and what not to. As to make a choice between the consumer goods and capital goods involves the choice between the present and the future.

HOW to Produce helps in resolving the problem which technique has to be use for production such as labor intensive technique or capital intensive technique.

FOR WHOM to Produce is related with the distribution of national income. As people who have larger incomes would have larger capacity to pay and people who have low incomes would have low capacity to pay for the goods. It can be minimized as what should everybody get income exactly equal to what he produces. From this point the distribution of national product or income on the basis of equality seems to be the best.