The nature of the basic economic problem
| English | Chinese | Pinyin |
|---|---|---|
| scarcity | 稀缺性 | xī quē xìng |
| wants | 欲望 | yù wàng |
| resources | 资源 | zī yuán |
| finite | 有限的 | yǒu xiàn de |
| opportunity cost | 机会成本 | jī huì chéng běn |
| free good | 自由物品 | zì yóu wù pǐn |
| economic good | 经济物品 | jīng jì wù pǐn |
| consumers | 消费者 | xiāo fèi zhě |
| producers | 生产者 | shēng chǎn zhě |
You can't have it all
- There is never enough — enough money, time, or stuff — for everyone to have everything they want.
- That simple fact, scarcity 稀缺性, is where economics begins. It forces everyone to choose.
The basic economic problem
- Wants 欲望 are unlimited; resources 资源 are finite 有限的 (limited).
- So every society must decide: what to produce, how to produce it, and for whom.
The economic problem: unlimited wants and scarce resources cause scarcity, which forces choice, and every choice has an opportunity cost 机会成本
Scarcity and choice
Limited resources mean producing more of one good costs some of the other — the opportunity cost, shown by the frontier.
The basic economic problem exists because:
Scarcity = unlimited wants meeting finite resources.
Every economy must decide what to produce, how to produce it, and for whom.
These three questions follow from scarcity.
Economic vs free goods 自由物品
- An economic good 经济物品 is scarce, so it has an opportunity cost and a price (a phone, a sandwich).
- A free good is not scarce — using it costs nothing (air, sunlight). Almost everything is an economic good.
Consumers 消费者 choosing what to buy at a busy market — scarcity forces everyone to make choices
Which is a free good?
Air is not scarce, so it has no opportunity cost — a free good.
A good that is scarce and so has an opportunity cost is an ______ good.
Economic goods are scarce; free goods are not.
Who faces the problem?
- Consumers choose how to spend limited income.
- Producers 生产者 choose what to make with limited resources.
- Governments choose how to spend limited tax revenue.
Scarcity isn't poverty. Even a rich country faces scarcity — its resources are still limited relative to everything its people want. Scarcity is universal.
Match each decision-maker to its choice.
Scarcity forces choice at every level.
You've got it
- scarcity: unlimited wants vs finite resources → the basic economic problem
- every society decides what, how, for whom to produce
- an economic good is scarce (has a cost); a free good is not