Economic Problem Of Scarcity

Introduction

Economics, now this word become more popular and everybody has different ideas what it is about. Yes it is true that it is about money but money is only a small part of this big term. In economics we see and every little thing of life and in other words we learn how to allocate resources effectively and efficiently in order to fulfill virtually unlimited wants of human nature with limited resources. Because of that nowadays we face the economic problem of scarcity and we have to study economics.

There are two parts in this assignment. In the first part economic problem of scarcity, choice and opportunity cost are discussed using graphs and relevant information so as to explain what these terms mean and how they are used in real

Why we say scarcity is a problem is we have limited resources but virtually unlimited wants and needs as well. Therefore, we have to choose what to produce to fulfill important needs of society (from the most to the least important) as much as possible and save some resources for the future as they are scares.

Choice

What is choice?! Choice is choosing something out of two or more alternatives. In other words, it is trying to get better one. Because of scarcity we have to choose between alternatives. In reality, we make different choices every time when we do something. For example, if students have to do lessons, they have to forget about parties, if they want to buy a book, they can’t buy new beautiful clothes with a little money. Of course each of us faces the scarcity problem not in the same percentage. Rich people are able to purchase more than the people who has a little money, eat better, dress-up appropriately but anyway they also have to choose. Also, the choice is closely connected to opportunity cost.

Opportunity

Giving small credits to the public as it obviously increases the consumption. It obviously increases consumption in a country and the standard of life in the country and a country can have an opportunity to develop the tourism which has a big impact in the economy. The more tourists come the more money is brought to a country easily.

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As soon as these factors are implemented country’s economic curve would move outwards and this in turn illustrate its reflection on the GDP of a country. Even though the economy of the country may become economically well balanced and in some period of time it might increase from 2% to 4%. It is given in the Graph.1 below. (Graph.1)

Public transportation vs. private cars

The government is planning rise the quantity and frequency of public transports by 35% to cater to the wellbeing of its citizens. That means that there will be more buses and other means of transports and they run faster than it used to be. It is expected that the cost of inexpensive and frequent public transport would have and a negative effect on the number of owners of private cars and users of public transport. We are asked to illustrate the reaction of equilibrium price of Private cars and Public