Question

Describe a problem of scarcity at the microeconomic level and a problem of scarcity at the macroeconomic level?

Answer 1

Answer:

problem of scarcity: scarcity means shortage of resources to fulfill the demand. our wants are unlimited but the resources available to fulfill the wants are limited it gives rise to the problem of scarcity so we hake make choice among various wants to fulfill them.

problem of scarcity at the micro economic level: micro economics study about the small part of an economy or about individuals such as a consumer, firm, factors of production, cost and individual's welfare etc.

every consumer have lots of wants but he can not fulfill all of them so he has to make decision regarding which want to satisfy first as the resources are limited so he has to choose the want which is important and will give maximum satisfaction. A firm has to decide which product to produce and how much to produce by optimum utilization of available resources.

so at micro level we study about the individual's (consumer, firm, market etc.) choices and decisions to tackle the problem of scarcity.

problem of scarcity at the macro economic level : macro economics study about the whole economy such as aggregate demand and supply, investment, growth and overall welfare of the economy etc.

government have to make decision regarding distribution of resources in the economy in such a way that they get maximum benefit out of them as resources are less while population is large.