GENERAL KNOWLEDGE

Detailed explanation-1: -The Basic Problem-Scarcity Scarcity, or limited resources, is one of the most basic economic problems we face. We run into scarcity because while resources are limited, we are a society with unlimited wants. Therefore, we have to choose. We have to make trade-offs.

Detailed explanation-2: -Resources such as land, labor, and capital are limited in relation to their demand and the economy cannot produce all that people required to satisfy themselves. This is why economic problems exist in an economy. Scarcity is universal which is applicable to all individuals, institutions, and the economy as a whole.

Detailed explanation-3: -Economics is study of how people make choices under conditions of scarcity, and of the results of those choices for society. The study of individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets.

Detailed explanation-4: -Scarcity involves making choices. Scarcity means individuals, businesses and governments have to deal with the problem of unlimited wants, but limited resources. Every economic system, from capitalism to socialism, has to deal with the problem of scarcity whereby the demand is greater than the supply.