What is the universal economic problem?

Answer 1

The universal economic problem is scarcity; where there is limited time, money, energy, and resources to accomplish certain tasks. Economics is essentially the study of the decisions people make under the assumption of scarcity. Scarcity implies the concept of opportunity costs and cost benefit analysis. Opportunity cost is the idea that with every action or decision there is another action or decision given up. For example, a school administrator has to choose whether to hire more teachers or buy more school books and must choose between one or the other due to scarce resources. Economic analysis might be the prospective test score increases based on hiring more teachers or based on buying more school books. Whichever choice has the better outcome, the school administrator should choose that one. One of the most renowned examples of scarcity is resource scarcity recently was the recent food crisis in the summer of 2008, where the prices of commodities sky rocketed around the world causing many people to go hungry. This is revived debate of the Malthusian theory in which people multiply will grow at a rate faster than resources. One of the counters of Malthusian theory is that with greater wealth and education the Birth Rate decreases. The role of technology, efficiency, and human ingenuity is also a counter for the problem of scarce resources.