The Economic Problem 1

Student Information The Economic Problem 1

Although it would be nice, most people realise that they will never be able to fully satisfy all of their wants. This is because there are no limits to what we want. Even after we are able to satisfy certain wants, others will often arise. For example, a person who buys a gaming console will probably want to buy games to play on it. Depending on the type of games that they buy, they may then also want accessories, such as additional controllers and steering wheels. People’s wants also change over time. For example, the kinds of things that you want now are likely to be diff erent to what you wanted when you were 5 years old and by the time you turn 15 they are very likely to be diff erent again. Other factors that infl uence what people want include the time of year, advertising, peer pressure and aff ordability. Compared to our unlimited wants, the resources that we have to satisfy them are limited or scarce. Some people refer to this situation as ‘the economic problem’ because it creates a dilemma where people are forced to decide between their various competing wants. For example, think about all your personal wants and then consider how many of these goods and services you can actually aff ord. You have probably even had to choose between buying one item or another in the past. In the same way, governments often have to decide how limited resources will be allocated to meet the unlimited wants of the community. For instance, if too much money is spent on improving hospitals, there may be less money to spend on education. Making choices like this is diffi cult because both services are important for and valued by the community.

This is a Ready-Ed Publications' book preview. While most people understand what they can and can’t aff ord with the money that they have, they sometimes forget that it is not just money that is limited. The quantity of natural, cultural and human resources available to satisfy our needs and wants on Go to www.readyed.net. a long-term basis is also scarce. We must therefore make sure that resources are used in a sustainable way. This means that we must decide on the most effi cient ways of using resources and be careful not to waste them so that they will be available for both current and future generations to satisfy their needs and wants.