Question

Write the basic problems faced by an economy. Explain any three in detail.

Answer 1

The basic problems of an economy are:

1.Scarcity of resources: the resources (i.e. land labour, capital, etc.) are limited in relation to their demand. If the resources would have been unlimited, there would not have been any economic problem.

2.Unlimited human wants: the wants of a man are never ending and can never be fully satisfied. When one want gets satisfied, another want arises.

3.Alternate uses: resources are not only scarce but they also have alternate uses. This means that they can be put to various uses. Due to this, a choice has to be made between various uses.