The central problem of economics is to satisfy the people's and nation's wants. The problem we are faced with is that our{{U}} (1) {{/U}}, here identified as money, are{{U}} (2) {{/U}}. The only way we can resolve our{{U}} (3) {{/U}}is to make choices. After looking at our resources, we must examine our list of{{U}} (4) {{/U}}and identify the things we need{{U}} (5) {{/U}}, those we can postpone, and{{U}} (6) {{/U}}we cannot afford. As individuals, we face the central problem involved in economics — deciding just how to allocate our limited resources to provide ourselves with the greatest{{U}} (7) {{/U}}of our wants.
Nations face the same problem. As a country's population{{U}} (8) {{/U}}, the need for more goods and services grows{{U}} (9) {{/U}}. Resources necessary to production may increase, but there are{{U}} (10) {{/U}}enough resources to satisfy the total desires of a{{U}} (11) {{/U}}. Whether the budget meeting is taking place in the family living-room, in the conference room of the corporation{{U}} (12) {{/U}}of directors, or in the chamber of the House of Representatives in Washington, the basic problem still exists. We need to find{{U}} (13) {{/U}}of allocating limited resources in order to satisfy unlimited wants.
A short time ago, economists divided goods into two categories, free and economic. The former, like air and water, were in{{U}} (14) {{/U}}abundance that economists had no concern about{{U}} (15) {{/U}}of scarcity and what to do about it. Today many of these "free goods" are in{{U}} (16) {{/U}}very expensive to use. Pollution has made clean air and water expensive for producers who have to filter their waste products, for consumers who ultimately pay for the producers' extra costs, and{{U}} (17) {{/U}}tax-payers who pay for the government's involvement in cleaning the environment.
In the 1990s, almost all goods are {{U}}(18) {{/U}}. Only by effort and money can they be{{U}} (19) {{/U}}in the form people wish.
Meeting the needs of people and the demands from resources available leads to the basic activity of production. In trying to{{U}} (20) {{/U}}unlimited wants from limited economic goods, production leads to new problems in economics.