Central Problem of an economy

Introduction :

No matter how rich we are, the available resources are never enough to satisfy our never ending needs so it is rightly said “Needs always outpace our means”.

Also scarcity of resources is a hard reality Resources are not only scarce, but have alternative uses as well.

For example: Land (a scarce means of production) can be put to alternative uses, you can build factories on it or construct houses or grow crops on it or covert it into a playground.

Due to the scarcity of resources and resources has alternative uses, we are facing the Problem of choice. It is the problem of allocating scarce resources(land) to alternative uses (factories, houses, crops or playground).

Problem of choice is the basic economic problem. This is the root cause of emergence of economics as a subject matter of study.

Also read Understanding Economics