The Basic Economic Problem: Scarcity
- The basic economic problem is that resources are scarce
- In economics, these resources are called the factors of production
- In economics, these resources are called the factors of production
- There are finite resources available in relation to the infinite wants and needs that humans have
- Needs are essential to human life, e.g. shelter, food, and clothing
- Wants are non-essential desires, e.g. better housing, a yacht, etc.
- Due to the problem of scarcity, choices have to be made by producers, consumers, workers and governments about the best (most efficient) use of these resources
- Economics is the study of scarcity and its implications for resource allocation in society
All Stakeholders in an Economy face the Basic Economic Problem
Consumers |
Producers | Workers | Government |
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