Grade 9 Economics Unit 2 Part 1 9ኛ ክፍል ኢኮኖሚክስ ትምህርት

ECONOMICS Grade 9 Grade 9 Economics Unit 2 Part 1 Unit 2 The Basic Economic Problems and Economic Systems What is an economic problem “? ” What does efficient allocation” mean? “ What are human needs “? This unit focuses on the basic economic problems, the central problems of economies, and economic systems. Choice Economic Problem Opportunity Cost Scarcity Shortage Allocation Of Resource Choice Of Technique, Problem Of Distribution Capitalism Command Economy Freedom Of Choice Mixed Economy Private Property Profit Motive Traditional Economy Grade 9 Economics Unit 2 Part 1 9ኛ ክፍል ኢኮኖሚክስ ትምህርት 2.1 The Basic Economic Problems: Scarcity, Choice, and Opportunity Cost The scarcity of resources relative to unlimited human wants is a plain fact of life. Households, producers, and the whole economy are faced with the problem of scarcity of natural and human-made resources. Consequently, it is necessary to use resources as efficiently as possible. Some basic economic concepts to be discussed Scarcity Choice Opportunity Cost The Production Possibilities Frontier Economic Growth and the PPF Scarcity The fundamental economic problem that any human society faces is the problem of scarcity. Scarcity refers to the fact that all economic resources are finite or limited in supply. However, their being limited should be expressed in relation to human wants. Thus, the term “scarcity” reflects the imbalance between our wants and the means to satisfy those wants. Scarcity of resources generates economic problems. If resources were fully abundant, there would be no economic problems at all. Note: Scarcity does not mean shortage. A good is said to be scarce if the amount available is less than the amount people wish to have at zero price. Scarcity is a universal and endless problem. On the other hand, We say that there is a shortage of goods and services when people are unable to get the amount they want at the prevailing price. A shortage is a specific and short term problem, Choice If resources are scarce, output will be limited. If output is limited, we cannot satisfy all of our wants. So, a choice must be made.Due to the problem of scarcity, individuals, firms, and governments are forced to choose as to what output to produce in what quantity what output not to produce. In short, scarcity implies choice, which, in turn, implies an opportunity cost. Scarcity → limited resource → limited output → unlimited human want → Choice involves costs → opportunity cost