Introduction to Economics:

Explain why scarcity and choice are basic problems of economics?

What are the costs and consequences of providing the subsidies and welfare

Limited resource is the basic assumption in Economy. Moreover, it's very true in daily life.

For example, Peter want to join in several clubs and focus on his academic in the same time. However, here an opportunity cost for him to consider, because every one has only 24 hrs a day. That means, people have to make choices in limited time. In daily life, most things are limited. Yet, air is not.

Scarcity and choice are fundamental concepts in economics because they reflect the reality that resources are limited while human wants and needs are infinite. Let me explain why scarcity and choice are basic problems of economics:

1. Scarcity: Scarcity refers to the situation where there are not enough resources available to produce all the goods and services that individuals desire. Resources can be physical (such as land, labor, and capital) or non-physical (such as time and knowledge). Scarcity forces us to make choices about how to allocate these scarce resources to fulfill competing needs and wants.

To understand scarcity, consider a simple example: Suppose there is only a limited amount of water available for a town. If people need more water for drinking, agriculture, and industrial use, but there is not enough supply to meet all these demands, scarcity arises. In this situation, choices need to be made about how to allocate the limited water resources efficiently and fairly.

2. Choice: When faced with scarcity, individuals, businesses, and governments must make choices. Choices are the decisions people make about what goods, services, or opportunities to pursue given the scarcity of resources. The choices we make are influenced by our preferences, needs, and constraints.

For example, individuals must choose how to spend their income on various goods and services based on their priorities and budget constraints. Likewise, businesses have choices about what resources to utilize, how much to produce, and which markets to target. Governments face choices about how to allocate public resources, such as tax revenues, across different sectors like healthcare, education, or defense.

Economics provides tools and frameworks to help analyze these choices and their consequences. It examines how individuals, businesses, and societies make decisions in the face of scarcity and how they allocate resources efficiently. Additionally, it explores how people's preferences, incentives, and trade-offs influence their choices.

In summary, scarcity and choice are fundamental problems of economics because they highlight the need to make decisions about resource allocation in the face of limited resources and unlimited wants. Understanding these concepts is essential to analyze economic behavior and study how societies manage and optimize scarce resources.