L4

The Economic Problem-Scarcity and Choice.[1]

Economy is derived from two Greek words which mean house and distribute. Economy was studied to understand the management of a household that later started being used to manage resources.

The chart shows the basic problem of the economy.

The basic problem of an economy deals with a man’s unlimited needs and wants and scarce resources. The resources include the production factors: land, labour, capital and entrepreneurship.

The factors of production.

Economics is the social science that studies how people use their scarce resources to satisfy unlimited needs and wants. From a teenager to a homemaker and then to a businessman, all face the same issue of how to spend their income to attain maximum satisfaction.

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[1] https://studiousguy.com/the-economic-problem-scarcity-and-choice/