Problem of choice
Also called: Economic choice, Choice · Topic: Scarcity, Choice and Economic Systems · NCERT: Class 11, Ch 1 "Introduction (Statistics for Economics)"; Class 12, Ch 1 "Introduction (Microeconomics)"; Class 12, Ch 2 "Theory of Consumer Behaviour"
Meaning
The problem of choice is the need to decide between competing uses of scarce resources or limited income. It arises from two facts together:
- resources are scarce, meaning limited compared with wants;
- resources have alternative uses.
If resources were unlimited, or could be used for only one thing, there would be nothing to choose. Every choice has an opportunity cost: the next-best option you give up. Time is also scarce, so how to spend it is a problem of choice too.
Example
A student has ₹100. They can buy a notebook now or save it for a tennis racket. They cannot do both. At the national level, the government must choose between spending on highways and spending on hospitals.
Don't confuse with
- Scarcity: scarcity is the cause (limited resources). The problem of choice is the result, which appears once those resources have alternative uses.