Answer to Question #70918 in Microeconomics for Anthony Odinaka

Question

relate the basic concept of economics to the three economic units

Answer 1

Scarcity is the most basic concept in economics. Simply put, in the world there are limited means to meet unlimited desires, so there is always a choice. For example, only so many wheat are grown annually. Then firms produce bread, rolls, beer and other goods according to the needs of households and available grain resources. Households, in turn, consume these goods according to their taste. And the state collects taxes from firms.