NOTES ON MICRO ECONOMICS
WHAT IS SCARCITY? WHAT DO YOU MEAN BY ABSOLUTE SCARCITY?WHY IS IT A PROBLEM,AND HOW DOES IT CAUSE PROBLEM OF CHOICE ?
SCARCITY IS A SITUATION WHERE IN THE RESOURSES AVAILABLE FOR THE SATISFACTION OF OUR WANTS ARE LESS THAN THE RESOURSES REQURIED FOR THE SATISFACTION OF OUR WANTS.
OR
SCARCITY IS A RELATIVE CONCEPT .IT IS ALWAYS STUDIED WITH REFRENCE TO OUR UNLIMITED WANTS WHILE THE MEANS OF RESOURSES OUR LIMITED.
IMPORTANTT NOTE:
SCARCITY CAUSES PRICE: Scarcity Causes Price, Grater the scarcity of a thing higher is its market price .Zero Scarcity would mean Zero Price.
WHY IS SCARCITY A PROBLEM?
Scarcity is a problem because Recourse is scarce in relation to our wants. It is also because resources have alternative uses.
Problem Of Scarcity Causes Problem of Choice:
As the resources are scarce and have alternative uses, the problem of Choice arises.
Problem of choice is also called/or is also known as the Problem of Allocation of resourses to Alternative uses.