Supply and Demand

Mankind’s material wants are met by the consumption of goodsl which are obtained by production. If we assume that the quantity of goods which can be made is restricted by the limited quantities of resources, and that human wants are unlimited, the problem of scarcity emerges, i.e. goods are scarce not simply in the sense that there is only a limited quantity available, but relative to the demand for them. Also, given that all of society’s wants cannot be met because of scarcity, there is a problem of choice, i.e. society has to choose how to allocate resources between competing uses. Three aspects of this problem are usually distinguished in elementary economics:21.What goods are to be produced and in what quantities ?2.How is each good to be produced, given that it can usually be made by using alternative combinations of resources ?3.How are the goods to be distributed, i.e. what share of production does each person receive and what combination of goods does the share consist of?