Basic Concept of Economics – Wants, Scarcity & Choice

The basic concepts or elements of economics are:

• Wants.
• Scarcity.
• Choice.
• Scale of Preference.
• Opportunity Cost.

Let’s discuss these basic concepts:

1. Wants:

Wants are the needs or desires of man. It is impossible to satisfy all the numerous human wants. Wants or goods could be in the form of food, textbooks, clothes, shoes, houses, etc. While services could be in the form of medical services, pedicure services, legal services, etc. Human wants are unlimited, because once a need is met, another one arises, therefore human wants are insatiableimpossible to satisfy More.

2. Scarcity:

Scarcity is the limited supply related to the available resources. The limited resources are used for the satisfaction of unlimited wants. To an economist, goods are scarce, relative to the demand for them. We have numerous wants but the means to satisfy them are limited.  

3. Choice:

Choice is the selection and satisfaction of the competitive items. Choices are necessary because wants are many, but the resources available to satisfy them are limited. The scarcity of goods led to choice. Choice enables an individual to properly assess the items before purchasing them. Since human wants are unlimited, and the resources to satisfy them are limited, a choice is constantly made between alternative wants. 

Individuals, firms, the government, and the nation, in general, are faced with the problem of choice. 

Individuals, as a result of a limited supply of resources, are forced to choose out of their many wants. Individuals are faced with issues of what to consume, how to make more money, how much to spend or save, what to wear, what to eat etc.