A common question in economics. - FreeEconHelp.com, Learning Economics... Solved!


A common question in economics.

A typical question asked of students in the beginning of an economics class, deals with what types of questions the science of economics attempts to answer.  The trick here is to remember that economics is the science of resource allocation, and that this is important because of scarcity.  Scarcity means that we cannot fulfill our unlimited wants and desires because there are a finite amount of resources.  Here is an example of a question below:

Economic questions always deal with:

a. financial matters
b. political matters
c. insufficient resources
d. choice in the face of limited resources

All of these answers could potentially be true but we need to identify the best answer.  First lets look at a.  Economics does deal with financial matters quite a bit, but it also looks at choices individuals make such as when to get up, or which pizza to order which don't necessarily deal with financial matters so a. is not the answer.  The same applies to b. while  economics typically does analyze political matters this isn't always the case.

This may lead us to c. as a potential answer, but it is not technically correct.  The idea of insufficient resources implies we do not have enough resources to finish a project, or that a shortage exists.  This would not be the case during market equilibrium, because there is no shortage, therefore a sufficient number of resources exist, so c. isn't the answer.

This leads us to d. which is the right answer because it is a synonym for "allocation of scarce resources in the face of scarcity."  It is also general enough to cover financial and political questions, without being specific enough to limit it to them.