UNDERSTANDING SCARCITY AND ECONOMICS

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 Learning Contents:                                                            

·         Understanding Scarcity of Resources.

·         Understanding Economics.                                                                                                                                

       Scarcity:  

 Scarcity means shortage or we can say that anything which is limited or short in supply.              

Resource:

Something that is available for use or that can be used for support or help. It can be the stock of money, materials, tools, physical assets, labor, land, etc.

Resources are not only scarce but have alternative uses as well.

Scarcity of Resources: scarcity is a very basic fact of life. There will be no need of understanding the concept of scarcity if we are supplied with unlimited means (resources) but in reality, our needs are always greater than our means (resources). 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. They are simply not enough resources that can meet all our needs and wants.

Resources have alternative uses: It means the different ways in which resources can be put to different uses (opportunity cost).  For e.g. Land can either be used to grow crops or build a school. Another example says money can either be used for paying the school fees or paying the electricity bills.

Resources are not only scarce and they also have alternative uses which lead to the problem of rational management of resources or allocation of resources. It is also called an economic problem or problem of choice. Keeping the above fact in consideration, people have to make decisions in their own self-interest, weighing benefits and costs.

Understanding Economics: 

The study of economics revolves around the core problem of rational management of resources. Economics is the study of how humans make choices under conditions of scarcity or we can say that economics is the study of how humans make decisions in the face of scarcity.

These can be individual decisions, family decisions, business decisions, or societal decisions. 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 defense or to protect the environment. In most cases, there just isn’t enough money in the budget to do everything. Economics helps us understand the decisions that individuals, families, businesses, or societies make, given the fact that there are never enough resources to address all needs and desires.

   Multiple Choice Questions:

  1. The resources for satisfying human wants are:

              a.    Limited

             b.  Unlimited

                    c.  None of these

  2. When does the problem of scarcity arise?

       a. Supply of resources> Demand of Resources

       b. Supply of resources< Demand of resources

       c. Supply of Resources= Demand of Resources.

   3. Economic Problem arises because

      a. Resources are scarce

      b. Human wants are unlimited

      c. Resources have alternative uses

      d. All of these.

    Answers

  1. a    2. b    3. d









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