In this text, we will be talking about what Economics is. Let’s say Eshaan wants to buy ten toffees and two chocolates. He only has Rs 15 with him. One toffee costs Rs 1 and one chocolate costs Rs 5. To buy ten toffees and two chocolates, Eshaan will need Rs 20. But he only has Rs 15. So he must buy less than what he wants. He can buy ten toffees and one chocolate. Or he can buy five toffees and two chocolates. He is faced with two choices. He cannot buy what he wants because he does not have that much money. He has to make a decision on how to spend his Rs 15.
This is what Economics is. Eshaan had just Rs. 15. But what he wanted cost Rs. 20. He has to decide to buy less toffees or less chocolates. Economics studies how people spend the resources they have. Money was a resource for Eshaan. He had to choose between the number of toffees and the number of chocolates he could buy. In the same way, every person must choose how they use their resources. Every one wants to be happy. They use their resources in a way so that they can be happy.
WANT vs NEED
One of the most basic parts of Economics is Want vs Need.
What is Need? A need is something one must have. They cannot live without it. We all need air to breathe. We cannot live without water. Without food, we will all starve. These are things that everyone needs. Economics studies how to make sure that most needs are met. No one should have to live without food. Extra food is not needed but some quantity of food is necessary.
What is want? A want is something that someone does not need. But having it will make them happy. An example of a want is Coca Cola. It tastes good. It makes people very happy. But it isn’t needed. A person can survive without Coca Cola. Another example is the toffees and chocolates Eshaan wants. They would bring joy to Eshaan. But Eshaan doesn’t need the sweets. Eshaan does need air so that he can breathe.
A want is something that one would like to have. A need is something that one has to have. It is important to live.
SCARCITY AND CHOICE
Now, let’s talk about Scarcity and choice. Let’s go back to Eshaan’s example. Eshaan wanted 10 toffees and 2 chocolates. They would have cost Rs. 20. Eshaan only had Rs. 15. Eshaan lacked resources. He did not have as much as he needed. This is what scarcity is. Scarcity is lack of the things we need in the number we need them. For example, sometimes, the ice cream we want to eat is finished because many people ate it before us. Sometimes, we cannot buy a notebook because the store does not have any more. Eshaan cannot buy 10 toffees and 2 chocolates because he does not have enough money. This is all scarcity. We want/need certain things but they are not there for us to buy.
People cannot eat mangoes all year because mangoes are only available in the summer. Grapes are not available to buy in winters because they only grow during that time. So they can only be sold during the summers. The mangoes and grapes are not there in the market to buy. Scarcity tells us that the products in the market are not always as much as we want.
Now comes the matter of choice. Eshaan only had Rs. 15 to buy chocolates and toffees. He could not buy 2 chocolates and 10 toffees like he wanted. He could buy 1 chocolate and 10 toffees. Or he could buy 2 chocolates and 5 toffees. Or he could buy 15 toffees. Or 3 chocolates.
But he could not buy how much he wanted. This is because of scarcity of money. So he had to make a choice. Eshaan must choose how much toffees and chocolates he wants to buy with Rs. 15. When mangoes are not there, a person must choose what fruit to consume. When the store has run out of notebooks, we must choose what else to buy. These are all choices. For Eshaan, the choice can be very difficult. Every one has to make difficult choices. It is because Scarcity is there in the market. If there was no scarcity, everyone could buy everything they wanted or needed.
The concept of Want and Need along with Scarcity and Choice is what Economics basically is. There are many other parts of the topic. But they all start from Want-Need and Scarcity-Choice. Every person wants to be happy. Economics basically studies how this can be done through looking at Want and Need, and Scarcity and Choice.