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Scarcity and choice are the two essential ingredients of economic analysis. A good is scarce when the human desire or need for it exceeds the amount freely available. As a result, society must choose the most efficient manner of allocation of those scarce resources.
Based upon scarcity and choice, why is it not possible for governments to efficiently provide everyone with free healthcare and free higher education without there being negative effects to the aggregate economy?
Think about society’s need to choose amongst competing resources and goals. How does personal gain affect choices by individuals and government? Opportunity costs. While we want to do one thing, we can’t do others based upon scarcity and opportunity costs. Resources are finite. What about incentives as opposed to free offerings?
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