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Basic Economic Problem (1)

The document discusses the basic economic problem of resource allocation, highlighting the necessity of making choices due to limited resources. It presents scenarios, such as a school's budget and California wildfires, to illustrate how decisions must be made regarding what to produce, how to produce, and for whom to produce. Key economic terms related to scarcity and resource management are also defined.

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chakrabortipalash4
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3 views25 pages

Basic Economic Problem (1)

The document discusses the basic economic problem of resource allocation, highlighting the necessity of making choices due to limited resources. It presents scenarios, such as a school's budget and California wildfires, to illustrate how decisions must be made regarding what to produce, how to produce, and for whom to produce. Key economic terms related to scarcity and resource management are also defined.

Uploaded by

chakrabortipalash4
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Unit 1

Basic Economic Problem


Why we need to make choices?
Central Economic Problem
Allocation of resources
"Imagine your school receives $1,00,00. How should it be spent?"

● Build a new computer lab


● Buy sports equipment
● Improve the library
● Install air purifier
● Plant more trees
● Improvement in food menu

Then tell them:

"You can only choose two because the money is limited."

Resource allocation is the process of deciding how limited resources are distributed among different uses to
satisfy as many needs and wants as possible.
Three basic economic question-Resource allocation

What to produce?

How to produce ?

For whom to produce


California Wildfires (USA)

Every year, California experiences


devastating wildfires. Governments
have limited firefighters, aircraft, water,
and emergency funds.

If there are only 20 helicopters but 50


wildfires, where should they be sent
first?
Important Terms

● Scarcity ● Economic Good


● Consumption ● Production
● Resources ● Allocation of resources
● Choice ● Firm
● Free Good ● Household

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