4.1.1.4 ~ Scarcity, Choice and the Allocation of Resources

• What is the basic economic problem?

  Human wants are infinite but resources are scarce
• What does scarcity mean?

  That choices have to be made about how scarce resources are allocated between different uses
• What are the 3 types of economies?

  • Command > centrally planned by government

  • Free > the laws of supply and demand provide a sole basis for the economic system - without government intention

  • Mixed