THE
ECONOMIC
PROBLEM
MICROECONOMICS
,ECONOMICS AS A
SOCIAL SCIENCE
, The Economic Problem
Economic Problem = How do we satisfy unlimited wants and needs with finit
resources?
Scarcity = a situation that arises when people have unlimited wants & needs i
the face of limited resources we need to make choices.
i.e. economies have to allocate resources as efficiently as possible due to the
imbalance of what we can feasibly produce & what we wish to consume.
HOWEVER this means each choice comes with an opp cost = the value of the
benefit of the next best alternative foregone in an economic choice.
Exception: free good = a good without an associated opp cost because it is
unlimited in supply & has no production cost freely available.
ECONOMIC
PROBLEM
MICROECONOMICS
,ECONOMICS AS A
SOCIAL SCIENCE
, The Economic Problem
Economic Problem = How do we satisfy unlimited wants and needs with finit
resources?
Scarcity = a situation that arises when people have unlimited wants & needs i
the face of limited resources we need to make choices.
i.e. economies have to allocate resources as efficiently as possible due to the
imbalance of what we can feasibly produce & what we wish to consume.
HOWEVER this means each choice comes with an opp cost = the value of the
benefit of the next best alternative foregone in an economic choice.
Exception: free good = a good without an associated opp cost because it is
unlimited in supply & has no production cost freely available.
