What does the term "economizing problem" mean for an individual and for society? As part of your answer, include the...

Economizing problem 4

Economizing problem

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Economizing problem is the vital issue, which comes up in a society because of limited goods and services as contrasted with supply and demand. To solve economizing problem in a society, decisions are drafted on how resources are allocated to those who are need of them. To an individual it means that, there is inefficiency in productivity and thus there is no employment coming forth (ntriligator, 2002).

Economizing problem has two fundamental facts. First, wants are unlimited. The desire for people to use goods and services in order to provide utility is minimal. The second fundamental fact is that, fundamental economic resources are scarce. These include land labor, capital and entrepreneurship.

Land comprises of natural resources such as minerals and soil while labor includes wage earnings for individuals and the workforce. Another resource of vital importance in economizing a problem is the Capital. This comprises of equipments, liquid cash, plants, machineries and trucks used in production. On the other hand, Entrepreneurs plays an important role because they are involved in marshalling resources to spearhead the production of the final good. Consumer sovereignty (Adjibolosoo, 2006).

In the event of economizing a problem, opportunity cost is inevitable. This is normally the best value for a foregone alternative. With limited resources available, an exclusive alternative among other alternatives is made.

The phrase “other things equal” is mostly used in the context of economic analysis where prediction of an effect is caused with no variable and thus persistent problem occurs (ntriligator, 2002).

An assumption in economics is used in elimination of a problem as result of variables so that complexity in its study is minimized and brought into an understandable focus.

Economic efficiencies are divided into two. Whereas Allocative efficiency is concerned with output quantity of products in the market place, productive efficiency requires outputs be produced at the lowest average cost if need be (Adjibolosoo, 2006).

Consumer sovereignty is the economic power conferred to the consumer and exercised in preference of the consumer in a free market area.

Reference

ntriligator, M. D. (2002). Mathematical optimization and economic theory. Philadelphia: Society for Industrial and Applied Mathematics.

Adjibolosoo, S. (2006). Developing civil society: Social order and the human factor. Aldershot, Hampshire [u.a.: Ashgate.