Based on economic theory, if a person wants to purchase a large stereo system, what must necessarily occur?
Answers
If a person wants to buy a large stereo system, he must allocate his resources. Allocation of resources is an economic theory which is applicable to every aspect of our life like buying any product or selling any good or service. In this case, a person must allocate some of his financial resources to buy the large stereo system.
The economic theory always prefers a balance between income and expenditure.
This enables a person to save for future as well.
Thus, if a person wants to purchase a huge stereo for his room he should pay heed to his own income.
If it is affordable in a sense that he saves a lot even after purchasing it then according to the economic theory it will maintain a balance but if doesn’t save anything then it will lead to an economic imbalance.