Economic Problems :
Economics problem of mankind owes its origin to the fact that human wants are numerous and of different kinds. The resource to satisfy the human wants are limited and scarce. If the time or resources at our disposal are unlimited so that we could satisfy our wants, then no economic problem would have arisen at all. Or if we have ALLADIN's Lamp with us so that we could satisfy all our wants by rubbing it, then there would have been no economic problem. The economics problem has arisen simply because wants are unlimited and the means to satisfy them are scarce.
In order to get maximum satisfaction we are to choose our wants by fixing up a list of priority. So the two foundation stones on which the subject of economics ress are ..
1) Mutliplicity of human wants
2) Scarcity of resources.
This scarcity means that resources creates two kinds of problems. one is the allocation of resources to the best use so that the maximum satifaction is achieved. The second problem is to eliminate waste. if in a country, the resources are not fully utilized and they are lying idle, this will means the maximum satisfaction is not being derived from the limited available resources and are being wasted for nothing.
The resources are not only scare but have alternative uses. So a Decision
has to be made between them. The Decision to make choices between alternative uses has to be made by all of us. Even the richest nation has to distribute its resources in such a manner so as to be able to secure maximum satisfaction with minimum cost.
Problems Which Every Economy has to solve:
Every economy has to solve the following five inter related problems.
Economics problem of mankind owes its origin to the fact that human wants are numerous and of different kinds. The resource to satisfy the human wants are limited and scarce. If the time or resources at our disposal are unlimited so that we could satisfy our wants, then no economic problem would have arisen at all. Or if we have ALLADIN's Lamp with us so that we could satisfy all our wants by rubbing it, then there would have been no economic problem. The economics problem has arisen simply because wants are unlimited and the means to satisfy them are scarce.
In order to get maximum satisfaction we are to choose our wants by fixing up a list of priority. So the two foundation stones on which the subject of economics ress are ..1) Mutliplicity of human wants
2) Scarcity of resources.
This scarcity means that resources creates two kinds of problems. one is the allocation of resources to the best use so that the maximum satifaction is achieved. The second problem is to eliminate waste. if in a country, the resources are not fully utilized and they are lying idle, this will means the maximum satisfaction is not being derived from the limited available resources and are being wasted for nothing.
The resources are not only scare but have alternative uses. So a Decision
has to be made between them. The Decision to make choices between alternative uses has to be made by all of us. Even the richest nation has to distribute its resources in such a manner so as to be able to secure maximum satisfaction with minimum cost.
Every economy has to solve the following five inter related problems.
- WHAT TO PRODUCE.
i.e.
a. The nature of the goods to be produced and
b. The quantity of production.
c. The allocation of resources
- HOW TO PRODUCE.
i.e. the techniques and the ways of production. The capital intensive or the labour intensive.
- WHEN TO PRODUCE.
i.e. the time of production or the season or the period of production.
- WHERE TO PRODUCE.
i.e. the place of production. The area or region where the production will be made.
- FOR WHOM TO PRODUCE.
i.e. the person to whom the product will be delivered.
- EFFECTIVENESS, EFFICIENCY, GROWTH AND DEVELOPMENT.
i.e. the optimal use of resources which increases in the quantity as well as in quality.
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