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Economic problems faced by an economic system due to scarcity of resources are known as basic economic problems There are not enough resources to produce everything that human beings need and wants. These problems are common to all economic systems.
Although focused on the concept of scarcity, the centerpiece of modern economics, this book is not written from within the discourse of neoclassical economics Scarcity is the situation in which available resources, or factors of production, are nite, whereas wants are in nite Rather, it locates economic thinking in a much broader historical context.
The primary issue that economics deals with is scarcity, the idea that human wants are infinite, but the resources available to fulfil these wants are limited
This fundamental problem forces individuals and societies to make choices about how to use scarce resources effectively. Someone or something faces a constraint People, firms, and countries all face constraints A central subject of economics
How people, firms, and economies do the best they can, taking into account the constraints they face. David ricardo developed the theory of comparative advantage to explain the benefits of specialization and free trade The theory is based on the concept of opportunity cost • opportunity cost is that which we give up or forgo, when we make a decision or a choice.
The document discusses the concept of scarcity, highlighting how limited resources must be managed to satisfy unlimited wants and needs.
An important part of economics is the study of how to allocate scarce resources, in other words how to assign resources to answer the what to produce and how to produce questions, in order to meet human needs and wants in the best possible way. Because of scarcity, we must choose what goods and services we will produce, because we can’t do everything.
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