Question

1A: What economics is and why it's important?

1B: Discuss of the role of choice and scarcity.

Answer 1

1.A. Economics is the important you get to know how societies, governments, businesses, households, and individuals allocate their scarce resources. The economics can also provide valuable knowledge for making decisions in everyday life.

Economics is concerned with the optimal distribution of resources in society. The subject involves, understanding what happens in markets and the macro-economy, examining statistics about the state of economy and explaining their significance, understanding different policy options and evaluating their likely outcomes.
Economists are well known for advising the president and congress on economic issues, formulating policies at the Federal Reserve Bank, and analyzing economic conditions for investment banks, brokerage houses, real estate companies, and other private sector businesses. They also contribute to the development of many other public policies including health care, welfare, and school reform and efforts to reduce inequality, pollution and crime.

• Economics provides a mechanism for looking at possible consequences as we run short of raw materials such as gas and oil.
• A critical divide in economics is the extent to which the government should intervene in the economy. For example – should the government provide health care free at the point of use or is it more efficient to encourage private health care.
• The free market leads to countless examples of market failure. I feel one of the best uses of economics is to provide solutions to overcoming market failure.
• One of the principal jobs for economists is to understand what is happening in the economy and investigate reasons for poverty, unemployment and low economic growth.

1.B. Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defence or to protecting the environment.

The Problem of Scarcity-  We live in a world of scarcity. People want and need variety of goods and services. This applies equally to the poor and the rich people. It implies that human wants are unlimited but the means to fulfil them are limited. At any one time, only a limited amount of goods and services can be produced. This is because the existing supplies of resources are extremely inadequate. These resources are land, labour, capital and entrepreneurship.

These factors of production or inputs are used in producing goods and services that are called economic goods which have a piece. These facts explain scarcity as the principal problem of every society and suggest the Law of Scarcity, The law states that human wants are virtually unlimited and the resources available to satisfy these wants are limited.

The Problem of Choice-

Scarcity and Choice as Economic Problems (With Diagram)

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In this article we will discuss about Scarcity and Choice as Economic Problems. After reading this article you will learn about: 1. The Problem of Scarcity 2. The Problem of Choice.

The Problem of Scarcity:

We live in a world of scarcity. People want and need variety of goods and services. This applies equally to the poor and the rich people. It implies that human wants are unlimited but the means to fulfil them are limited. At any one time, only a limited amount of goods and services can be produced. This is because the existing supplies of resources are extremely inadequate. These resources are land, labour, capital and entrepreneurship.

These factors of production or inputs are used in producing goods and services that are called economic goods which have a piece. These facts explain scarcity as the principal problem of every society and suggest the Law of Scarcity, The law states that human wants are virtually unlimited and the resources available to satisfy these wants are limited.

The Problem of Choice- Since are live in a world of scarcity, a society can produce only a small portion of goods and services that its people want. Therefore, scarcity of resources gives rise to the fundamental economic problem of choice. As a society cannot produce enough goods and services to satisfy all the wants of its people, it has to make choices.

A decision to produce one good requires a decision to produce less of some other good. So choice involves sacrifice. Thus every society is faced with the basic problem of deciding what it is willing to sacrifice to produce the goods it wants the most.