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The problem of choice in the economy

Economic resources that can be used to meet the needs of society, are always limited, have a quantitative and qualitative limits. The ability to bypass the private restraints fundamentally change nothing. Limited resources is the fundamental problem of economics: if the resources were available in unlimited quantity, and all the blessings necessary to meet the needs of society, would be produced in sufficient quantities.

In economic theory, the absolute and relative allocate limited resources. Absolute limit means that resources are, in principle, can not be increased. Relative limitations mean that some resources can be increased, but to a lesser extent in comparison with the growth needs.

Limited resources will require determination of production capacity. Manufacturing capabilities - is the largest amount of output that can be achieved with the full use of resources. Since resources are limited, the society has to make technological choices, deciding which needs should be met, and what - no. Thus, the limited resources of determining the alternative use necessitates an alternative choice from among mutually exclusive options. From the set of permissible uses of resources selected the most appropriate for the purposes of the society.

An alternative choice between the directions of the use of resources can be reflected in the form of scale of production capacity (tabular form) or as a production possibility curve (graphical form).

Price is not always expressed in money, but it always reflects the opportunity cost, or opportunity cost (opportunity cost).

Under the opportunity cost (opportunity costs) understand the amount of benefits one species from which to abandon (give it up, "sacrifice"), to get a certain quantity of goods of another species (more preferred).

Production possibilities curve shows the maximum possible amount of simultaneous production of two goods with given resources and technology at the disposal of

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Global economy

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