Homework Sourset Assignment 2 Econ 201 Importance of scarcity SolutionScarc
Solution
Scarcity refers to the problem when the unlimited human wants are not fulfilled with the limited resources in the world. This leads us to the question of how these resources need to be used. This leads human beings to choosing to allocate the limited resources for their unlimited wants. This also brings us closer to the concept of opportunity cost where we choose one alternative over the other ie. forgo the other option. Scarcity is an important concept because had there been no scarcity then all the unlimited wants would have been fulfilled by the unlimited resources. Economics brings the concept of scarcity to understand the purpose of allocation of resources judiciously and making the most of the available resources. Scarcity basically brings up the concept of giving up an alternative and choosing the other one. It leads to trade off or opportunity cost.
