***Principals of Microeconomics--- Unlimited Desires and Limited Resources In th
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Question
***Principals of Microeconomics--- Unlimited Desires and Limited Resources
In this assignment, you will be writing an essay explaining how unlimited desires and limited resources combine to create the need for economic analysis.
Two of the most fundamental concepts in microeconomics are the assumptions that people have unlimited wants, and that resources to satisfy those wants are limited. Please write an essay that answers the following questions:
What does it mean for individuals to have unlimited wants?
Why can’t individuals have everything they want?
How do unlimited wants and limited resources lead to individual choice in microeconomics?
Explanation / Answer
The statement that individuals have unlimited wants means that every person wants to maximise his/her sense of satisfaction ( known as utility) and in order to maximise the satisfaction the person tried to maximise the consumption of resources and hence in this way the individuals asks for unlimited supply of goods.
The concept that there is limited amount of resources available for the production of goods causes a situation of scarcity and hence an individual can’t get anything they want as going for one good will leads to skipping other. And in order to maximise the satisfaction a utility function have to be developed which related the utility that a person get from a good and the cost of that good and this choice of goods requires to maximise value to utility function within the given budget constraints.
The case of unlimited wants and limited resources cause a condition of scarcity and hence an individual have to choose between goods to maximise the utility function. And since different person acquire different amount of utility from different goods and hence different individuals will choose different goods and different quantity of goods to maximise the utility function which leads to individual choice in microeconomics.
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