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The economic problem sometimes called the basic or central economic problem
asserts that an economy's finite resources are insufficient to satisfy all human wants and
needs. It assumes that human wants are unlimited, but the means to satisfy human
wants are scarce.
Though unrelated...
Quote- The World is enough for everybodys needs but not for everybodys Wants.
M.K.Ghandhi
Scarcity refers to the basic economic problem, the gap between limited that is,
scarce resources and theoretically limitless wants. This situation requires people to
make decisions about how to allocate resources efficiently, in order to satisfy basic
needs and as many additional wants at possible. Any resource that has a non-zero
cost to consume is scarce to some degree, but what matters in practice is relative
scarcity.
Also referred to as "paucity."
1 The cost benefit principle is an accounting concept that states benefits from an
accounting system should always outweigh the costs associated with it
2 Ie, to, Take no action unless its marginal benefit is at least as great as its marginal
cost.
3 An individual (or a firm or a society) should take an action if, and only if, the extra
benefits from taking the action are at least as great as the extra costs.
a. Reservation Price
b. Opportunity Cost
c. Marginal Cost
This can be compared with average total cost or ATC, which is the
total cost divided by the number of units produced and does include
fixed costs. For discrete calculation without calculus, marginal cost equals the
change in total (or variable)cost that comes with each additional unit
produced.
d. Marginal Benefit
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