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The Central Problem of Economics

The central problem of economics is to satisfy the people's and nation's wants.

The problem we are faced with is that our resources, here identified as money, are __1__. The only way we can resolve our problem is to make choices. After looking at our resources, we must examine our list of __2__ and identify the things we need immediately, those we can postpone, and __3__ we cannot afford. As individuals, we face the central problem involved in economics-deciding just how to allocate our limited our limited resources to provide __4__ with the greatest satisfaction of our wants.

Nations face the same problem. As a country's population ___5__, the need for more goods and services grows correspondingly. Resources necessary to production may increase, but there __6__ are enough resources to satisfy the total desires of a nation. Whether the budget meeting is taking place in the family living room, in the conference room of the corporation __7__ of directors, or in the chamber of the House of Representatives in Washington, the basic problem still exists. We need to find __8__ of allocating limited resources in order to satisfy unlimited wants.

A short time ago economists divided goods into two categories, free and economic. The former, like air and water, were in __9__ abundance that economists had no concern for them. After all, economics is the __10__ of scarcity and what to do about it. Today many of these "free goods" are __11__ very expensive to use. Pollution has made clean air and water expensive for producers' extra costs, and __12__ taxpayers who pay for the government's involvement in cleaning the environment.

In the 1990s, almost all goods are __13__. Only by effort and money __14__ obtained in the form people wish.

Meeting needs of people and the demands from resource available __15__ the basic activity of production. In trying to meet unlimited wants from limited economic goods, production leads to new problems in economics.

EXERCISE:

1. A) limited B) unlimited C) scarcity D) abundant

2. A) want B) problem C) wants D) resources

3. A) those B) some C) others D) many

4. A) them B) themselves C) ourselves D) ours

5. A) expand B) extends C) grows D) increase

6. A) always B) sometimes C) often D) never

7. A) management B) function C) board D) group

8. A) people B) economists C ) way D) methods

9. A) so B) great C) such D) such an

10. A) form B) study C) means D) source

11. A) practically B) in practice C)in reality D) practicably

12. A) the B) / C) for D) with

13. A) plentiful B) scarce C) abundant D) in full supply

14. A) they can be B) can they be C) they must be D) must they be

15. A) are led to B) leads C) lead to D) leads to

KEY:

A C A C C D C D C B C C B B D

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