CENTRAL PROBLEMS OF AN ECONOMY
CENTRAL PROBLEMS OF AN ECONOMY The basic economic activities of life are production, distribution, and disposition of goods and services. A society will be facing scarcity of resources during the time of fulfilment of these activities. Economic problems arise in every economy due to limited resources, unlimited wants, and alternative uses of resources. This variation between the supply and demand leads to the formation of central problems of an economy. Scarcity of resources : Resources like labour, land, and capital are insufficient as compared to the demand. Therefore, the economy cannot provide everything that people want. Unlimited Human Wants : Human beings demands and wants are unlimited which means they will never be satisfied. If a person’s one want is satisfied, they will start having new desires. People’s wants are unlimited and keep multiplying, therefore, cannot be satisfied because of limited resources. Alternative Uses : Resources being scarce, the same resourc...
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