Scarcity is one of the key concepts of economics. It means that the demand for a good or service is greater than the availability of the good or service. Therefore, scarcity can limit the choices available to the consumers who ultimately make up the economy. Scarcity is important for understanding how goods and services are valued. Things that are scarce, like gold, diamonds, or certain kinds of knowledge, are more valuable for being scarce because sellers of these goods and services can set higher prices. These sellers know that because more people want their good or service than there are goods and services available, they can find buyers at a higher cost. Show
Scarcity of goods and services is an important variable for economic models because it can affect the decisions made by consumers. For some people, the scarcity of a good or service means they cannot afford it. The economy of any place is made up of these choices by individuals and companies about what they can produce and afford. The goods and services of any country are limited, which can lead to scarcity. Countries have different resources available to produce goods and services. These resources can be workers, government and private company investment, or raw materials (like trees or coal). Certain limits of scarcity can be balanced by taking resources from one area and using them somewhere else. Sellers like private companies or governments decide how the available resources are spread out. This is done by trying to strike a balance between what consumers need or want, what the government needs, and what will be an efficient use of resources to maximize profits. Countries also import resources from other countries, and export resources from their own. Scarcity can be created on purpose. For example, governments control the printing of money, a valuable good. But, paper, cotton, and labor are all widely available across the world, so the things required to make money are not themselves scarce. If governments print too much money, the value of their money decreases, because it has become less scarce. When the supply of money in an economy is too high, it can lead to inflation. Inflation means the amount of money needed to buy a good or service increases—therefore money becomes less valuable, and the same amount of money can buy less over time than it could in the past. It is therefore in a country’s best interest to keep its paper money supply relatively scarce. However, sometimes inflation can help an economy. When money is less scarce, people can spend more, which triggers a rise in production. Low inflation can help an economy grow. By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to promote the interests of American workers, businesses, and consumers, it is hereby ordered as follows: Section 1. Policy. Sec. 2. The Statutory Basis of a Whole-of-Government Competition Policy. Sec. 3. Agency Cooperation in Oversight, Investigation, and Remedies. Sec. 4. The White House Competition Council. Sec. 5. Further Agency Responsibilities. Sec. 6. General Provisions. JOSEPH R. BIDEN JR. THE WHITE HOUSE, Which of the following roles does the government fulfill in the economy?The government (1) provides the legal and social framework within which the economy operates, (2) maintains competition in the marketplace, (3) provides public goods and services, (4) redistributes income, (5) cor- rects for externalities, and (6) takes certain actions to stabilize the economy.
Which term best describes the allocation of resources that occurs under the private and public sectors?Allocational efficiency occurs when organizations in public and private sectors spend their resources on projects that will be the most profitable and do the most good for the population, thereby promoting economic growth.
How are economic resources allocated in a market economy quizlet?How are economic resources allocated in a market economy? By the decisions of households and firms interacting in markets. an economy in which most economic decisions result from the interactions of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.
How does government allocate resources by managing externalities?how does the government allocate and mange some resources by managing externalities? determining which one is positive or negative to produce goods and services that generates benefit or costs to someone.
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