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Tuesday, 26 June 2018

Economic problem

Economic problem is a problem of choice. Problem of choice is associated with the allocation of resources to get maximum result because resources are scarce having alternative uses. Resources have alternative uses means that resources can be used for more than one purpose. Economic problem arises due to the following reasons:

  • Resources are limited
  • Resources have alternative uses
  • Wants of human being are unlimited

An individual faces this problem when he spends his available income in different goods. He allocates his money in a manner so that he can get maximum satisfaction. A producer has to allocate his resources in such a manner so that production cost can be minimized.

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