NCERT Class 9 Social Science Understanding Society India and Beyond Part 1 Chapter 08 Building Blocks in Economics The Problem of Choice PDF Download

Chapter 8: Building Blocks in Economics: The Problem of Choice

The Big Questions

1. What does economics deal with?
2. What are the key questions in economics?
3. How do different economic systems address these questions?

If you had to choose, would you spend your pocket money on snacks or save it for a new pair of shoes? If your school library had only five copies of a new storybook but 20 students wanted to read it, who should get the book first? Can the students share them or should the school buy more copies? Which type of crop should a farmer grow based on the condition of the soil, rainfall, and market demand? Should an enterprise employ more labour or capital in the production process? Should the government spend more on building highways or hospitals?

These are not random questions; rather, these are examples of economic choices that individuals, enterprises, and governments have to make.

Some of our preferences are needs, such as essentials like food, water, and shelter, while others are wants, like gadgets, vacations, or luxury items. Human wants are unlimited and keep changing; for instance, people may want to upgrade from a bicycle to a motorbike and then to a car.

[Figure 8.1: Needs vs wants, See in your textbook]

Let's Explore

• List three things your parents bought this month. Can you classify them into needs or wants?
• Do you think having too many wants may create problems? Why or why not?

Choices and Limited Resources

Resources are required to satisfy human needs and wants. In Grade 8, you have learnt about factors of production - land, labour, capital, and technology - which are used for the production of goods and services. However, both natural and human-made resources are limited in quantity. They can be put to many alternative uses such as allocating money to buy fruit or a pair of shoes. Not just households, economies also have to decide how to use their scarce resources in the best possible way to meet unlimited wants and improve people's quality of life. For example, pictures in Fig. 8.2 show the alternative uses of steel.

[Figure 8.2: Alternative uses of steel, See in your textbook]

Teacher's Note

When a resource like steel can be used for medical equipment, aircraft, or refrigerators, choosing one use means giving up the others. This is opportunity cost, and it appears in every economic decision. In exams, always ask yourself: what am I giving up by choosing this option?

When one alternative is chosen, the other options are given up. The value of what is given up is known as the opportunity cost. Let us understand this through an example. Imagine that a farmer has a piece of land and can choose to grow either barley or wheat on it. With limited land, water, and labour, the farmer must decide how much of each crop to produce. Consider the following table, which shows various combinations of quantities of barley and wheat that can be grown by the farmer.

When these combinations are plotted on a graph (Fig. 8.3), where the x-axis represents the quantity (in kg) of barley grown, and the y-axis represents the quantity (in kg) of wheat grown, a downward sloping curve is derived.

[Figure 8.3: Production Possibility Curve, See in your textbook]

This is called the Production Possibility Curve (PPC), which shows the trade-off between barley and wheat produced. As the farmer moves from point A to E, they produce more barley and lesser wheat. However, to grow more barley, some wheat must be sacrificed - this is the opportunity cost of growing barley. All the points on the PPC show the maximum output that can be produced through efficient use of resources by avoiding wastage. This helps in better planning and decision-making by enterprises and the governments.

Teacher's Note

Every point on the Production Possibility Curve represents the most you can make with what you have. If a farmer is at point B (25 kg barley, 90 kg wheat), they cannot move to get both more barley and more wheat without getting new resources. The opportunity cost of moving from B to C is 10 kg of wheat given up to get 25 kg more barley.

Key Points

• Economics deals with making choices because human wants are unlimited but resources are limited.
• Needs are essentials like food and shelter, while wants are items like gadgets and luxury goods that keep changing.
• Opportunity cost is the value of what you give up when you choose one option over another.
• The Production Possibility Curve shows all the different combinations of two goods that can be made using all available resources efficiently.

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