The Fundamental Economic Principles

1809 WordsFeb 6, 20187 Pages
Part 1 Scarcity When humans moved from hunter/gatherer societies to villages and then cities, a division of labor occurred. Some people became producers of food, some processors, some the ancillary goods and services that are necessary for humans to live together. They found that sometimes there was a surplus of goods, and sometimes a lack of goods. This lack of goods is called the scarcity principle, and it is the fundamental economic principle of needing (or wanting) goods in a world that has limited resources. It means that in society, there will almost always be situations in which there are insufficient resources to fulfill all human wants and needs. Of course this also implies that at any given time, not all individual or group goals can be provided, which results in tradeoffs and substitutions. If we think about scarcity as a principle, then the idea of having scarce resources becomes a fundamental principle of what we call economics really the science of the relationship between production, goods and services, and the amounts we have of each. In any given group (society) there are needs for resources. Resources are the way we make products or turn raw products into something useful (agriculture). Resources might be land, raw materials like ores, etc. Then human resources are necessary to turn these raw recourses into something useful; metal, flour from grain, wine or beer from grain as well, meat prepared for human consumption, etc. Often these particular
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