Name: Vrinda Bhutani Date: 01.09.

2022
1.1 Scarcity: The Basic Economic Problem
Review the materials and complete the following questions.

Questions 1-
3: 

My Answers
Question 1: Explain the relationship between the terms in each of these pairs:
a. wants
scarcity
Ans. Wants can be defined as desires that can be met by consuming products.

Scarcity can be defined as lack of resources to meet all human wants.

The relationship between the two terms scarcity and wants is that scarcity occurs due to the
lack of resources to fulfil all human wants.

b. consumer
producer 

Ans. Consumer is a person who buys a good or service

for personal use whereas a producer is a person who makes goods or
provides a service to the consumer.

c. factors of production

entrepreneurship

Ans. The factors of production are the resources

needed to produce goods and services.
Examples of factors of production are as follows
1. land
2. labour
3. capital
4. entrepreneurship etc.

Entrepreneurship (a factor of production) can be defined as vision, skill,

Ingenuity and willingness to take risks.

Question 2: What is the difference between needs and wants? Explain how a
need may also be a want.

Ans. Needs refers to an individual's basic requirement that must be fulfilled, in order to
survive. However, wants can be described as something the consumer would like to have
but it is not necessary for survival.
A need can also be a want. Something that is necessary for survival can also be in the
interest of the consumer.

Question 3: How does scarcity affect consumers? Producers?

Ans. The scarcity of goods plays a significant role in affecting competition in any price-
based market. If the goods are scarce then the cost will be high which effects both, the
consumer and the producer.