In the chapter The Problem is Scarcity the author discusses the importance of economics, defines scarcity and opportunity cost and mentions the five basic economic questions.
First, economics is important to study because it affects a person everyday in different ways and helps you make better economical choices. It is the study of how individuals and nations make scares resources to fulfill their wants. For example, you can choose on a better economical shoe or solve economic problems.
In addition, the author points out that many people do not have or cannot have enough income, time, or other resources to satisfy their every desire. So, in the end they would have to decide on what they really want and wait another day for any other thing that came second. The value of the best next alternative that had to be given up for the alternative that was chosen is called opportunity cost. .
Moreover, the author emphasizes that there are five basic economic questions asked by every individual to decide on which wants and desire they will choose. The first question that is asked is, "What should be produced?" This is asked because it depends on the resources they have to know what can be produced. The second question is, "How much should be produced?" Producers need to decide on how much they need to make so they will not over or under produce. The next question asked is, "How should the product be produced?" Producers need to think of an economical and well-organized way to combine resources to make the product that is needed. Then they question "Who gets what and how much?" For example, they decide on how much free medical care someone gets. Finally, they would consider on "Who answers the first four questions?" There are three economic systems to see who will answer the last question. They are: market economy, traditional economy and command economy. .
Finally, the author concludes the meaning of economics, scarcity and opportunity cost.