Tag: objectives of economic planning in india

Scarcity refers to the limited supply of resources which are demanded in the economy. It does not mean producing less goods and services in a given time period. Scarcity of resources is the central problem of the economy. Because the human wants are unlimited and these resources are limited and have alternative uses. 

The labor helps in the production of goods and services by providing the required skills and knowledge. And in return for this input in the production process, they demand something in return in the form of monetary benefits. The money or price given to them is thus called salaries and wages.  

No, there are no traditional economies in the world today. Traditional economies are the ones which are based on one of the few traditional activities like agriculture, hunting, fishing, etc. These economies do not have a monetary system and are largely based on barter trade. Today there is no country which operates as a traditional economy. 

All our wants cannot be satisfied. This is because the resources are scarce and do not get discovered every day. Due to the less amount of resources available, the demands of the huge growing population cannot satisfied. 

The most important economic problem is the scarcity of resources. The resources that are used to satisfy our wants are limited in supply. Due to this problem all the wants and desires of a man cannot be fulfilled as the wants are never-ending. This requires the efficient use of resources.

Scarcity of resources leads to both unsatisfactory wants and evaluation of alternative uses of these resources. The resources present in the economy are limited whereas the human wants are never ending and unlimited. Due to this all wants cannot be fulfilled. Hence, they remain unsatisfied. Not only this, the resources also have alternative uses. This means that they can be put to various uses. Thus it becomes important to put the resource in the best use so that they can be used efficiently. 

Scarcity of resources effects households, business firms, governments and even individuals. The main problem of economics is the scarcity of resources which affects everyone. The needs and wants of households remain unsatisfied. The businesses and governments don’t have enough resources for their operations. Due to this problem, it is necessary that we use these resources efficiently. 

‘Scarcity of economics’ is the central problem of economics. It means that the resources in the world are limited whereas the wants of a man are unlimited and never ending. Due to this, the resources are always insufficient to satisfy all human wants and needs. Apart of being scarce, the resources have alternative uses as well. Thus, it becomes extremely important to use the resources in the most effective and efficient manner.

The three fundamental questions of economics are:

1.      How to produce: it talks about the techniques that should be used to produce goods and services that are required by the people.

2.      What to produce: it talks about the things that should be produced with the limited resources that are available in the economy.

3.      For whom to produce: it talks about the selection of the category of people for whom the goods are to be produced. More for the rich, less for the poor or less for the rich and more for the poor. 

D.All of the above