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"scarcity forces us to choose." Let's look at two situations: before poverty is eliminated and after...

"scarcity forces us to choose." Let's look at two situations: before poverty is eliminated and after poverty is eliminated. Using economic reasoning, how would you explain the difference in choices before and after poverty is eliminated?

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Answer #1

Choices are based on your income. If you have a high income you can buy anything that can be brought within your income level. If you are poor you can't buy anything.

This can be explained using income effect. For individuals who are poor, they gave scarce income to do anything. So they try to survive with whatever they have. But, interestingly they have time.

Once poverty is removed, he is free from the income constraint but he can now have time as the scarce resource.

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