Why does an economic problem arise?Explain.

All the economies in the world face the situation of economic problem. Economic problem is one in which one has to think which resource to use in what quantities to produce any commodity. The problem arises because we are endowed with limited number of resources to fulfil our unlimited wants. Also the resources have alternative uses that is a single resource can be used to fulfil different wants.
Since the resources are scarce and wants are unlimited, all the wants cannot be fulfilled by given resources so some of the wants has to be forgone.
The three basic economic problems, associated with it, are:
  1. What to produce
  2. How to produce
  3. For whom to produce
The first problem of what to produce states that since resources are scarce and have alternative uses, so which want should be fulfilled first or which commodity should be produced first.
The second problem is associated with the choice of technique of production as a commodity can be produced using different techniques.
The third problem is associated with the problem of distribution that is for which section of the society goods would be produced first.

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