Q9Managerial Economics & Financial Accounting
Question
2 marks
Why is there problem of scarcity and choice in economics?
Answer
Scarcity exists because human wants are infinite while the resources to satisfy them are limited and have alternative uses.
The problem of scarcity and choice is the fundamental basis of all economics. It exists because:
1. Human desires and wants are virtually infinite. 2. The resources available to satisfy these wants (land, labor, capital, time) are finite and scarce. 3. Furthermore, these scarce resources have alternative uses.
Therefore, society and individuals are constantly forced to make choices about what to produce, how to produce it, and who gets to consume it.