The study of economics helps to solve the problems within the households and the country by utilizing its interrelated concepts of scarcity, rational choices and also opportunity cost among other methods. These concepts can help in decision making, trade and also government policies.

Step-by-step explanation

When discussing the economic problems there are essential things that you might need to consider such as opportunity cost, rational choices and scarcity. The human wants are ever rising and there is a need to satisfy them whenever possible. However, one has to make the right decision and choose the needs that he or she should take care about first with the given income. With scarcity an individual or a country has to make the best decisions to utilize the scarce resources. With scarcity one needs to make a rational choice. The human wants are always increasing and a choice to satisfy the wants is therefore the most essential thing to consider. The rational choice as per economics study calls for selection of the options that can help to create more value of a product through the scarce resources. Therefore, individuals and companies should make the best choices to deal with the scarce resources so that they can generate value and satisfy wants. On the other hand, opportunity cost arises from the rational choices and scarce resources available. The opportunity cost represents the benefits that a household or investor would miss out in choosing one alternative over them other. Given that a person would not choose all of the things that he or she wants to do at the same time then the aspect of opportunity cost arises. Understanding of the benefits foregone by choosing another investment that allows for better decision making is an essential way to solve a problem. The scarcity of resources helps to make the rational choices and also understanding of the opportunity costs aspects.

There are essential factors that do determine the demand for goods and services. The five determinants of goods in a given market such as Mauritius that you can read on here. Tastes and preferences. The preferences and tastes the buyers have for the given commodity such as coffee can either lead to more goods demanded or less goods needed. The changes in consumer preferences and tastes make the demand to shift from time-to-time. When there is high advertisement for coffee its demand increases. The people's income. The income is what shapes the consumer purchasing power. If people are having more to spend, they might have no issue spending on more products. High income would lead to demand of clothes, electronics and also luxury cars. However less income would deter consumers to spend more which causes the demand to decline. The change in price of the related goods. The prices of goods that are complements or substitutes there is a great chance in the demand of a given product. If the price of tea remains the same but that of coffee falls more people might choose to take more coffee instead which means that the consumer would substitute coffee for tea and the demand for tea goes down and vice versa. The number of people in the market that are willing to buy the goods. Many people who need a product from the market matters as it helps to raise the demand. Therefore, a high population of consumers can help to make the demand of coffee to increase. In addition the consumer's expectation in the future prices would also affect the demand of a product. If people do think that the price of coffee would increase  in the future then they might spend more today on it. Also if the consumer do hope that they will have more income in the future then they will demand more goods in present.

Monopolies are always viewed as acting on their own profit motives rather than helping the common interests of public. However, there are public and private monopolies and they can pursue different purposes towards the consumers. The abuse of power in terms of the public monopolies can also have an impact when it comes to the common interests of the consumers. If a monopoly is not checked it can result to higher prices for poor goods, less innovation and also can drive other competitors out of business. Therefore, to check the monopolies through the government regulations, pricing and other methods can help a lot the consumers as they can access the products of high quality and also the ones that they can afford.  In a monopoly setup a firm seeks to maximize profits by setting the output where marginal cost equals to marginal revenue. You can refer to the monopoly graph below.

The output qm and Pm illustrates this in the graph. Compared to a competitive market situation the monopoly seeks to sell less by increasing the prices. The monopolist can achieve supernormal profits between the intersection of AC and AR. Moreover, the monopoly can achieve the deadweight welfare loss situation as well. If the monopoly is not regulated there are high chances that it might not work with the interest of the public. 

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