The+Economizing+Problem

The Economizing Problem: Over time humans beings have proven to be insatiable, we will always want more. Unfortunately for us there is a limit to what this world can provide. There is a definite number of resources in the world and thus our wants will never be satisfied. This forces us to make a choice of how we want to spend our limited resources.This is the main problem in economics; how do we maximize our happiness, or benefits, given the limited amount of resources that exist. The economizing problem applies both to the decisions of individuals as well as to those of larger societies.

In general, humans are self-interested, so they will always try and choose the course that gives them the most profit or pleasure. We can use economics to analyze the different choices and solve this problem. To make a decision we look at the costs and benefits of each decision, if the costs are greater than the benefits then maybe another action should be taken.

Rising oil prices are a great example of the economizing problem. As our technology has grown it has made it a lot easier to buy cars and thus our gasoline consumption has gone up. But unfortunately, oil is an nonrenewable resource and there is only a limit amount of it on this planet. So as oil becomes more scarce, the price goes up.

media type="youtube" key="Af7-G8vPy-c&hl=en&fs=1" height="344" width="425" The deforestation of the rain forests is also another great example of the economizing problem. Because of the demand for products rising, we need more resources to meet those demands. People are cutting down the rain forests to get wood and land to help feed the growing need for goods.

Sample question: The economizing problem is based on the fact that society has wants, but there are only a ___ number of resources.

links: http://www.washburn.edu/sobu/rwalker/EC200/Notes/Chapter_2.pdf http://everything2.com/index.pl?node_id=1216937 http://en.wikipedia.org/wiki/Economics

Answer: Unlimited, Limited