Two Basic Economic Problems: Scarcity and Unlimited Wants.
You have one thousand taka. You want a shirt, pants and a good pair of shoes. You cannot buy them all. Economics begins at exactly this gap, and this page explains why it never quite closes.
1. Wants never end
People cannot get everything they desire. This not getting is what we call want. In life, wants have no end.
On the other side of want stands resources. When the amount of resources is small compared with needs, economics calls it scarcity of resources. Example: you need a shirt, pants and good shoes, but you have only one thousand taka. Put in prices of your own below. The prices are fictional, and nothing you type goes anywhere. The notebook is yours.
calculatorEnter prices (fictional)
The 1000 taka budget
The prices are fictional, not the book's. Only the one thousand taka comes from the book.
Because of scarcity, a person chooses according to importance. If there were no need to choose, there would be no need for economics either. Economics teaches how limited resources can be put to the best possible use.
2. Limited resources, so scarcity
Producing any good (say, a book) or service (say, medical care) needs resources. But resources are limited, so only a limited amount of goods and services is possible.
Limited resources cannot satisfy all wants. That is the reason for scarcity. If resources were unlimited, scarcity would never arise. The economist Samuelson put it this way: since resources are scarce, the question of using them in the best way becomes important for society.
3. Not everything is scarce
The want for sunlight and wind is very high, but we spend no money to get them. So scarcity does not usually arise for such things. Tap the five items and see which are scarce and which are not.
sort them outDoes it cost money?
Scarce or not?
Not scarce. The want is high, but it costs no money to get.
Not scarce. Like sunlight, it costs no money to get.
Scarce. Producing a book needs resources, and resources are limited.
Scarce. A service also needs resources, and resources are limited.
Scarce. Less than the needs: not enough for the shirt, the pants and the shoes together.
All five seen. What costs money and falls short of the need is scarce.
4. Selecting wants
Add resources and see whether every want can be met. The urgent wants are met first, and the rest are left out.
the list of wantsdrag the resources
Limited resources, unlimited wants
The list of wants, their order and the units of resources are a model, not the book's.
Wants are many and resources are limited. So out of many wants, people satisfy only a few. They weigh the importance of each want and meet the most necessary ones first, on a priority basis. This is the selection of wants. Put the steps in order, from cause to effect.
which firstFrom cause to effect
Steps of selecting wants
Start with a plain fact. Is it about wants, or about resources?
Yes. What next?
Not yet. Scarcity comes only once both facts are known: wants unlimited, resources limited. Choosing comes only after scarcity is clear.
Right order. Unlimited wants and limited resources give scarcity, and scarcity gives choice.
5. Check yourself
The first question is in the exam's style.
check yourselfpick one answer
Question 1
The resources or means to satisfy wants are-
The book's word is 'limited'; the point is the limit, not a vague amount.
This option does not match the book. Resources are needed for production but they are limited, so not all wants can be met.
Right. Resources are needed for production but they are limited, so not all wants can be met.
This option does not match the book. Resources are needed for production but they are limited, so not all wants can be met.
In the second, find the cause.
check yourselfpick one answer
Question 2
What problem do people face in meeting unlimited wants with limited resources?
This option does not match the book. Since resources are limited, people must choose which want to meet first.
Right. Since resources are limited, people must choose which want to meet first.
This option does not match the book. Since resources are limited, people must choose which want to meet first.
This option does not match the book. Since resources are limited, people must choose which want to meet first.
One more to settle it.
check yourselfpick one answer
Question 3
What is the main cause of economic problems?
Choice is the result of scarcity, not its root cause.
Right. Limited resources cannot meet unlimited wants; the limitation of resources is the root cause of the economic problem.
If resources were abundant there would be no scarcity.
Unlimited wants are one side of the problem; scarcity arises because resources are limited.
The whole note on six cards.
cut from the notetap to turn over
Six cards
QuestionWhat is it called when people do not get everything they want?
AnswerWant
QuestionWhat is scarcity of resources?
AnswerWhen the amount of resources is small compared with needs
QuestionWhat must people do because of scarcity?
AnswerChoose according to importance
QuestionWhy are not all wants satisfied, which is the reason for scarcity?