Economics is a study of scarcity. Discuss
- As stated by Samuelson, "Economics is the study of how men and society choose, with or without use of money, to employ scarce productive resources which could have alternative uses, to produce various commodities overtime and distribute them for consumption now and in future among various people and groups of society."
- Thus, the basic concern of economics is to allocate the scarce resources to the best possible use in the face of unlimited wants. A producer faces limited availability of resources for making his production decisions. Similarly, consumers face the constraint of limited money for purchase of different goods and services. For example, wit Rs.50,000 a consumer can only either purchase a laptop or a TV.
- The need for economics stems from the problem of scarcity and choice, basic to every economy. Every society is endowed with limited resources that can be used to enhance the development of the society but are put to alternative uses. Economics is about how an individual or society makes the decisions of utilising these resources efficiently for maximising their satisfaction of wants. It provides a basic framework to assist the society in making decisions by assessing costs and benefits of a particular decision.
- So, economics deals with the three central problems of an economy arising due to the problem allocation of resources- what to produce, how to produce and for whom to produce. This is why economics is a study of scarcity.