Question

What leads to an economic problem?

Answer 1

Problems relating to allocation of resources in an economy arise because of three main characteristics of resources.

(i) Unlimited Wants : Humans wants are unlimited.

(ii) Scarcity : Resources are scarce in relation to their wants.

(iii) Alternative Uses : Resources have alternative uses. For example, land may be used to grow wheat or rice or may be used for the construction of buildings.