Answer to Question #246243 in Microeconomics for Radhika Sharma

Question

How a petty shopkeeper utilize limited resources to fulfill needs

Answer 1

Solution:

An individual will normally have unlimited needs yet the resources to fulfill them are unlimited resulting to scarcity. Scarcity refers to a situation where the demand for resources is greater than the supply of the resources since resources are limited.

A petty shopkeeper will, therefore, be required to make a decision on how the scarce or limited resources can be allocated between numerous possible alternatives. That is, how best to allocate the limited resources in order to satisfy all basic needs and as many wants as possible. This involves evaluating which needs are critical and prioritizing them in an appropriate order. The most urgent needs are catered for first as he moves down the list to the least urgent needs. As such, the petty shopkeeper will ensure that all-important needs are fulfilled first before venturing into other less important needs.