How does the economics of welfare relate to the scarcity of resources?

Answer 1

EconomicsOpportunity cost is the cost in terms of the best alternative forgone. Holding valuable land out of use until the owner deems it most profitable creates huge problems for cities, public infrastructure cost, community vitality and environmental health. It is a primary cause of the dual problems of urban blight and suburban sprawl. For the landowner, the opportunity cost of using land today is the higher price or profit that could be gained in the future and since land tends to increase in value as population and production increase, there is a built-in incentive to wait. Yet, for society at large, the opportunity cost of valuable land being withheld from use is both the production and employment that doesn't happen on that site, and the cost of providing services and infrastructure to a less-suitable site, farther from where the action is. Another way to think about the notion of opportunity costs is to remember that human desires are unlimited, and people seek to satisfy their desires with the least exertion. Thus, we all must make choices about how we wish to use our labour, and the products of our labour, to get what we want.