Economics. scarcity and economic problems

Eco

1. Class XI Economics

2. Thought of the day

3. Scarcity Scarcity refers to the limitation of supply in relation to demand for a commodity. It refers to the situation when wants exceed the available resources.

4. Opportunity Cost The cost of next best alternative forgone.

5. Economic Problem It is a problem of choice involving satisfaction of unlimited wants out of limited resources having alternative uses.

6. Reasons for Economic problems Unlimited Human Wants : Human wants are never ending ie they can never be fully satisfied. Wants of the people are unlimited and keeps on multiplying. Limited Resources : Resources like land, labour, capital are limited in relation to there demand and economy cannot produce all what people want. Resources have alternative uses : Resources are not only scarce but can be put to various uses.

7. Central Problems of an Economy What to produce How to produce For whom to produce

8. Questions Scarcity and choice go together. Explain the statement. Explain the reasons for economic problems.