Economics is the science concerned with the problem of using or administering scarce resources to attain the greatest or maximum fulfilment of society’s unlimited wants.
Two fundamental facts
provide a foundation for the field of economics. These are shortly discussed
below.
Unlimited
wants: Society’s
material wants are unlimited and insatiable. Material wants include the desires
of consumers to obtain and use various goods and services which provide utility
such as automobiles, sweaters, pizzas, legal advice and the like. It also
includes those which businesses and units of government seek to satisfy such as
machinery, communications systems, hospitals and the like.
Material wants cannot
be satisfied completely. Over a short period of time, wants for a particular
product can be satisfied. But, over a period of time wants multiply. When some
of those are fulfilled, new wants are added. Overall objective of all economic
activity is the attempt to satisfy these diverse material wants.
Scarce
Resources:
Economic resources are limited or scarce. Economic resource means all natural,
human and manufactured resources that go into the production of goods and
services. Economists broadly classify such resources as either (1) property
resources— land or raw materials and capital; or (2) human resources— labour
and entrepreneurial ability.