ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Think about it – can a society satisfy each and every human wants? Certainly not. Therefore, it has to decide on who gets what share of the total output of goods and services produced. In other words, society decides on the distribution of the goods and services among the members of society.

Detailed explanation-2: -Human wants tend to be competitive. We have limited means and so we cannot satisfy all of our wants.

Detailed explanation-3: -One of the defining features of economics is scarcity, which deals with how people satisfy unlimited wants and needs with limited resources. Scarcity affects the monetary value people place on goods and services and how governments and private firms decide to distribute resources.

Detailed explanation-4: -The scarcity problem arises because our needs and wants are unlimited. While an increase in the productivity of our resources increases our capacity to produce more goods and services, it will still not be enough to satisfy all our needs and wants since our needs and wants are unlimited.