The economic problem

The economic problem

We cannot have everything that we want because there are not enough resources to provide it all. Everything produced comes from a resource. There are a number of resources:

- Natural resources: soil, climate, water, minerals, forests and fisheries

- Man-made resources: machinery, buildings and equipment

- Human resources: people and their skills

If society had all the land, labour, raw materials and other resources it needed, we could produce all the goods we wanted without making sacrafices. In reality resources are scarce. When we use resources to produce an item, we are taking away these resources from producing something else. This is a major problem in some societies.

Decision-making over the use of resources involves:

• making a choice (we can do one thing or the other)
• making a sacrifice (if we choose to do this with a resource, we cannot also do…