Scarcity is the mother of all economic problem.explain.10marks..plz plz answer me as much as possible..
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.
As we all know that scarcity is the main reason for study economics, as scarcity is not only the problem. In addition to being scarce, resources also have alternative uses.
For example:- milk is used for drinking, for tea and coffee for making butter and cheese and for curd and many more.
Due to scarcity there are various reasons for economic problems are follows:
(i) Scarcity of Resources:- Resources are limited in relation to their demand and economy can not produce all what people want.
(ii) Human Wants are Unlimited:- Human wants are never ending. As soon as one want is satisfied, another new want emerges. Human wants are also differ in priorities.
(iii) Alternate Uses:- Resources are not only scarce but they can also have various uses.
For example:- Petrol is used not only in vehicles but also running machines.
As a result if there is no scarcity of resources no economic problem rises. So we can say that scarcity is the mother of all problems related to economics.
It is true that the scarcity is the root of all economic problems. If there had been no scarcity there would have been no economic problem. This would have not necessitated the study of economics.
In our daily life, we face various forms of scarcity. The queues at the railway booking counters, over crowded buses, heavy traffic on roads, the rush to get a ticket to watch a movie of a popular film actor or actress, are all the manifestations of scarcity. We face scarcity because the things that satisfy our wants are limited in availability.
Further, the resources which the producers have are limited and also have alternative uses. For instance, take the case of food that we eat everyday. It satisfies our want of nourishment.
Farmers employed in agriculture grow crops that produce our food. At any point of time, the resources in agriculture like land, labour, water, chemical fertilizers, etc, all these resources have alternative uses.
The same resources can be used in the production of non-food crops. Thus, alternative uses of resources give rise to the problem of choice between different commodities that can be produced by those resources.