every problem has some basic reason for its existence.write down the basic reason that cause central problem in an economy.
Answers
Answer:
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Answer:
(i) Scarcity of Resources:
Resources (i.e. land, labour, capital, etc.) are limited in relation to their demand and economy cannot produce all what people want.
It is the basic reason for existence of economic problems in all economies. Scarcity is universal and applies to all individuals, organisations and countries. There would have been no problem, if resources were not scarce.
(ii) Unlimited Human Wants:
Human wants are never ending, i.e. they can never be fully satisfied. As soon as one want is satisfied, another new want emerges. Wants of the people are unlimited and keep on multiplying and cannot be satisfied due to limited resources.
Human wants also differ in priorities, i.e. all wants are not of equal intensity. For every individual, some wants are more important and urgent as compared to others. Due to this reason, people allocate their resources in order of preference to satisfy some of their wants. If all human wants had been of equal importance, then it would have become impossible to make choices.
alternate uses:
Resources are not only scarce, but they can also be put to various uses. It makes choice among resources more important. For example, petrol is used not only in vehicles, but also for running machines, generators, etc. As a result, economy has to make choice between the alternative uses of the given resources.