Answer the following question.
Why does an economic problem arise? Explain.
The following are the three main causes that give rise to the central problems in an economy.
- Unlimited Human Wants - Human wants are never-ending and new wants keep arising.
- Limited Economic Resources - In relation to the unlimited wants, the resources required to satisfy them are relatively scare and limited in supply.
- Alternative Use of Resources - Resources are not only scarce but also have alternative uses. This implies that a choice has to be made among the various alternative uses of resources.
Concept: Central Problems of an Economy
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