state reasons why an economic probles arises.give examples
Answers
Explanation:
Economic Problem:
The problem of choice, like an individual, also applies to the society as a whole. Thus, for an economy, economic problem is the problem of resource allocation.
According to Milton Friedman, “An economic problem exists whenever scarce means are used to satisfy alternative ends.
If means are not scarce, there is no problem at all.” According to Oscar Lange, “Science of administration of scarce resources in human society.”
(i) Unlimited Wants: we all have unlimited wants, where all of them cannot be satisfied.
(ii) Limited Resources: In economics, scarcity means that commodities and resources to produce goods and services are less in relation to their demand.
(iii) Alternative Uses of Resources: Means are not only limited but also have alternative uses.