what are economic problem? what are its causes
Answers
Answer:
The economic problem, sometimes called the basic, central or fundamental economic problem, is one of the fundamental economic theories in the operation of any economy. It asserts that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs.
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.”
Causes of Economic Problem:
Prof. Lionel Robbins in his famous book, “An Essay on the Nature and Significance of Economic Science” (1932), has given the following reasons for the emergence of economic problem.
Goods and services that satisfy human wants are produced with the help of resources such as land, labour, capital and enterprise. These resources are scarce while wants are unlimited. Due to scarcity of these resources, an economy cannot produce all that goods and services as required by its citizens.