Scarcity, choice and opportunity cost


What is the fundamental economic problem?

We have scarce resources which satisfy our unlimited wants. This leads to the problem of scarcity and therefore we have to make a choice. 

Scarcity: a situation in which wants and needs are in excess of the resources available. 

Opportunity costs of economic agents:

Consumers- chose what to spend their income on.

Producers- look at the profit forgone by not making alternative products.

Governments- lost value


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