Scarcity and choice are the basic problem of economics, because resources are limited (scarcity) and consumers have to make decisions on how to use…

The Problem of Choice: Therefore, scarcity of resources gives rise to the fundamental economic problem of choice. As a society cannot produce enough goods and services to satisfy all the wants of its people, it has to make choices. A decision to produce one good requires a decision to produce less of some other good.

Scarcity refers to a basic economic problem—the gap between limited resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.

– The three basic economic problems are regarding the allocation of the resources. These are what to produce, how to produce, and for whom to produce.

At the most basic level, economics attempts to explain how and why we make the purchasing choices we do. Four key economic concepts—scarcity, supply and demand, costs and benefits, and incentives—can help explain many decisions that humans make.

The Best Introductions to Economics

• Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life.
• Money Changes Everything: How Finance Made Civilization Possible.
• Hidden Order: The Economics of Everyday Life.
• The Truth About Markets: Why Some Nations are Rich But Most Remain Poor.

15 Examples of Economic Change

• Economic Systems. Changes in an economic system such as a shift from a centrally planned economy to a free market system.
• Politics.
• Economic Policy.
• Social Change.
• Demographics.
• Legal.
• Technological Change.
• Development.

Applying economics in everyday life

• Buying goods which give the highest satisfaction for the price.
• Sunk cost fallacy.
• Opportunity Cost.
• There’s no such thing as free parking.
• Behavioural economics and bias.
• Irrational exuberance.
• On the other hand.
• Diminishing returns.

Economics affects our daily lives in both obvious and subtle ways. From an individual perspective, economics frames many choices we have to make about work, leisure, consumption and how much to save. Our lives are also influenced by macro-economic trends, such as inflation, interest rates and economic growth.

Humans are the consumers responsible for all consumption. Humans are the investors responsible for all investment in the economy. Humans are the exporters and importers, responsible for all trade in the economy.

Family units make up the institutions that run society. Without family, a weak economic unit would be left with no stability or dependancy. The family is important so that there are available members to produce and distribute goods and services.