Question

Discuss how scarcity of resources is the mother of all economic problems.

Answer 1

Scarcity is the underlying concept in economics. Without it, there would be no need for economics! Consider if everytime you said the word 'IPHONE', a brand new iPHone would appear in your hand. Could you sell it? Of course not, because someone else can just produce one for free by shouting 'IPHONE'. There is no need for there to be a price or a marketplace for iPhones. Prices exist in order to efficiently decide who gets how much of a scarce resource. And since nearly every resource is scarce to some degree, all resources have a price. Economics is about doing the best we can given that there is a finite number of goods and resources.