Answer:
The following are the main causes due to which every economy faces economic problem. (i) Unlimited human wants: Human wants never-ends and they keep on arising. The unlimited human wants require unlimited resources to get fulfilled. But no matter how well an economy is endowed with resources, it will fall short to fulfill every wants. (ii) Limited availability of resources: Every economy has unlimited wants but its endowment of resources remains scarce to fulfill these unlimited wants. (iii) Alternative uses: The scarce available resources have alternative uses. This implies resources can be allocated to the production of different goods and services. The allocation of resources to one use involves a cost in terms of sacrifice of the other possible uses. Therefore, every economy has to decide the allocation of its resources in the best possible manner by analyzing the opportunity cost.
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