Why does the problem of scarcity of means arise?
Answers
The problem of scarcity rises because, in every economy, there is a designated nation or limited border within which an economy of that country functions. For every economy its functioning either under the hand of the government or under the hand of the market forces.
So in a planned economy the government controls what to produce, how to produce and for whom to produce.
And in a free market economy, free market forces, determine the choice for the consumers, depending on the demand and supply, the products and services are produced.
This problem of scarcity arises, because there are limited resources present in an economy, and those limited resources are supposed to be utilized to the best of the abilities to get a fruitful output. There is opportunity cost, making an issue of the ability of choosing the next best alternative.
In an economy, people have limited income to consume the products, so they have to choose which product to purchase.