Economic Issues Faced By Consumers And Producers - 1226 Words

Scarcity is one of the most fundamental economic issues faced by consumers and producers alike. It refers to a situation where decisions have to be made in how resources should be allocated to match the unlimited wants of consumers. According to Investopedia â€Å"Any resource that has a non-zero cost to consume is scarce to some degree†. This can range from anything such as water, food, petrol to homes or cars. Many people confuse shortages with scarcity. A shortage (study.com) â€Å"occurs whenever quantity demanded is greater than quantity supplied at the market price†. A shortage is only a short term issue and resources will eventually be replenished, whereas scarcity is a â€Å"naturally occurring limitation on the resource that cannot be replenished†. While scarcity is undeniably a huge issue in economics, there are other issues that we face. For example, one issue is the concept of opportunity cost. Opportunity cost refers to a situation where one course o f action has caused the loss of alternatives by choosing a different course of action. For example, if the government decided to spend on improving education, other areas such as healthcare, military, infrastructure etc. would have been the opportunity cost. The two fundamental paradigms in economics are known as the exchange and production paradigm. The exchange paradigm, which is used to understand neoclassical economics, is one which identifies itself with studying individuals as well as the allocation of resources (addressesShow MoreRelatedShould Free Trade Be Allowed?904 Words   |  4 PagesAllowing free trade to happen will allow many benefits like having larger varieties of goods and services for a lower price, growth for the economy and as well as increased exports for producers. Free trade will especially help the Trans-Pacific Partnership, a free trade agreement among 12 countries that border the Pacific Ocean. 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