Knowledge - 'Economic Problem and factors'

Economic Problem and factors

Economic Problem

There is a substantial difference between wants and needs. Human wants are countless, but the means are limited.

As the term suggests, the problem in an economy may cause economic problem. So, what's th...See more

e problem? The problem is scarcity, which means limitation of supply when compared to demand. And the economy faces doldrums.

Economic problem is a problem of choice involving satisfaction of unlimited wants out of limited resources.

I'll brief the three main reasons for existence of economic problems :

1. Scarcity of resources - Resources are limited in relation to the huge demand and an economy cannot produce all what people demand. To summarise, the basic reason for existence of economic problems.

2. Unlimited Human wants - Do you find this factor a tad bit relatable? Because our wants are relentless and never-ceasing. We always want something that differ in priorities and importance.

3. Alternate Uses - Resources can be put to various uses. One example - Petrol. If it is used for running vehicles, it is also used in running generators.

Ergo, economy has to make choice between alternate uses.

Added: 6 years ago