Scarcity and choice are inseparable. Discuss

OR

Scarcity and choice goes together, how?

Yes, scarcity and choice are inseparable. It is further cleared by the following:-

i) At consumer level: Here scarcity is limited income and choice is using the income in such a way that a consumer gets maximum satisfaction from it.

ii) At producer lever: Here scarcity is limited resources and choice is allocation of resources in way that there is maximum production of a commodity and a producer gets maximum profit.

iii) At country level: Here scarcity is limited natural resources and choice is allocation of national resources in such a manner that there is maximisation of social welfare at the level of country as whole.

What is positive economic/sentences? Give two sentences.

And

What is normative economic/sentences? Give two sentences.

Positive economic – It refers to what was, what is and what should be done in the given set of circumstances.

i) Positive statements do not pronounce value judgement.

ii) Positive statements cannot be verified from the real world.

Normative economic – it refers to what ought to be.

i) Normative statements pass value judgement

ii) These can be verified from the real world.

What are the central problems of the economy? [V.I]

Central problem of the economy are:-

i) What to produce: - Due to scare resources and allocation of resources to alternative use it is very important to decide what to produce and in how much quantity. It is very essential to decide which needs are to be given priority and which can wait.

a) Firstly, economy has to decide what goods and services are to be produce. For instance, it has to be deciding that from consumer goods like wheat, cloth, rice etc what to produce likely from capital goods like machines tractors, from peace time good bread, butter and from war time goods guns riffles what to be produced first.

b) After deciding what good to be produce it is very important to decide in what quantity is to be produced. For e.g. if it is decided that more of war goods will be produced like guns, rifles etc than less of educational goods will be produced like school, colleges etc.

ii) How to produce: - it is very important to decide by which method the production should take place as there two technique to perform the production process. These are :-

a) Labour intensive Technique: In this technique production is done through labours and by adopting this technique there is greater employment.

b) Capital intensive Technique: In this technique production is done through machines and by adopting this work is done efficiently and faster without much wastage of time.

An economy has to decide which technique is to be adopted according to the situation of their country.

iii) For whom to produce: - it is basically concerned with the distribution of the final goods or briefly distribution of the final production. It has two aspects :-

a) First aspect relate to personal distribution: How income generated through production is to be distributed among the society and different individual of household.

b) Second aspect relate to functional distribution: How income generated through production is to be distributed among the Factor of production like land, labour, capital, entrepreneur as a reward for the production.

These are the central problem of every economy.