Scarcity of resources is the mother of all
economic problems? Do you agree with this statement? Justify your answer with facts of human life.
Answers
Explanation:
It is only because of scarcity of resources that economic problems exist. Resources are limited and have alternative uses, and human wants are unlimited. This means that they can be employed for the production of different goods. Here arises problem of choice- what to produce, how to produce and for whom to produce. A firm has to decide which good to produce with the given resources, which technique to apply to produce that good (it can be labor intense technique or capital intense technique), and for which category of people to produce that good.
For example, with given resource cloth, a firm might produce apparels or bags. It is upto the firm to decide what to produce and how to produce. The firm sacrifices the benefits it will gain from the production of one good when it chooses to produce another.
Thus, it has rightly been said that scarcity of resources is the greatest of all economic problems.