Scarcity is the mother of all economic problem.explain.10marks..plz plz answer me as much as possible..
Scarcity is the mother of all economic problems.
central problems of an economy is:
what to produce?
how to produce?
For whom to produce?
What to produce?
Economy decides what to produce on the basis of the availibility of resources and the needs of the economy.The resources in the economy will be scarce,whereas the needs will be unlimited.Thus the economy has to decide which are the goods of atmost necessity and allocate them accordingly.
How to produce?
As stated earlier,Economy decided whether to use capital intensive technique if it has more if advanced technology and efficient resources or labour intensive techiniques if it has more if human resources.In England, population is less and thus has less human resources. So they have to stick on to capital intensive techiques.Whereas in India,population is extremely high.It is better if it adopt labour intensive technique.Adoption of capital intensive technique for the advancement of technology will result in jobless growth.
For whom to produce?
Economy must decide who should enjoy the benefits of the economy. If the economy enhances the production of luxury goods,it can benefit only the upper sections of the economy.But if the economy enhances the production of the basic needs like food,clothing and shelter it can benefit all sections of the society.
From the above information it is understood that scarcity of resources leads the economy to make a choice.This problem of choice is the major economic problem.
central problems of an economy is:
what to produce?
how to produce?
For whom to produce?
What to produce?
Economy decides what to produce on the basis of the availibility of resources and the needs of the economy.The resources in the economy will be scarce,whereas the needs will be unlimited.Thus the economy has to decide which are the goods of atmost necessity and allocate them accordingly.
How to produce?
As stated earlier,Economy decided whether to use capital intensive technique if it has more if advanced technology and efficient resources or labour intensive techiniques if it has more if human resources.In England, population is less and thus has less human resources. So they have to stick on to capital intensive techiques.Whereas in India,population is extremely high.It is better if it adopt labour intensive technique.Adoption of capital intensive technique for the advancement of technology will result in jobless growth.
For whom to produce?
Economy must decide who should enjoy the benefits of the economy. If the economy enhances the production of luxury goods,it can benefit only the upper sections of the economy.But if the economy enhances the production of the basic needs like food,clothing and shelter it can benefit all sections of the society.
From the above information it is understood that scarcity of resources leads the economy to make a choice.This problem of choice is the major economic problem.
