From an individual perspective, economics frames many choices we have to make about work, leisure, consumption and how much to save. Our lives are also influenced by macro-economic trends, such as inflation, interest rates and economic growth.

Economics is the study of how people choose to allocate their scarce resources to satisfy their unlimited wants.

In its most simple and concise definition, economics is the study of how society uses its limited resources. Economics is a social science that deals with the production, distribution, and consumption of goods and services.

Economics is the study of how humans make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions. Scarcity means that human wants for goods, services and resources exceed what is available.

Economic systems can be categorized into four main types: traditional economies, command economies, mixed economies, and market economies.

• Traditional economic system.
• Command economic system.
• Market economic system.
• Mixed system.

Economics plays a role in our everyday life. Studying economics enables us to understand past, future and current models, and apply them to societies, governments, businesses and individuals.

The duties of an economist are incredibly varied: research economic issues; conduct surveys and collect data; analyze data using mathematical models, statistical techniques, and software; present research results in reports, tables, and charts; interpret and forecast market trends; advise businesses, governments, and …

More broadly, an economics degree helps prepare you for careers that require numerical, analytical and problem solving skills – for example in business planning, marketing, research and management. Economics helps you to think strategically and make decisions to optimise the outcome.

– The three basic economic problems are regarding the allocation of the resources. These are what to produce, how to produce, and for whom to produce.

Examples of economic problems include How to deal with external costs/pollution, e.g. pollution from production. How to redistribute income to reduce poverty, without causing loss of economic incentives. How to provide public goods (e.g. street-lighting) which are usually not provided in a free market.

Economic issues facing the world economy, as well as regions and countries, include prospects for growth, inflation, energy and the environment, inequality, labor issues, emerging markets, and the impact of new technologies.

Scarcity is the root cause for all economic problems. Thus, it is due to the scarce availability of resources (having alternative uses) to fulfil the different and competing unlimited wants that an economy faces the economic problem or the problem of choice.

Causes of Economic Problem

• Scarcity of resources: Resources like labour, land, and capital are insufficient as compared to the demand.
• Unlimited Human Wants: Human beings’ demands and wants are unlimited which means they will never be satisfied.

Goods and services that satisfy human wants are produced with the help of resources such as land, labour, capital and enterprise. These resources are scarce while wants are unlimited. Due to scarcity of these resources, an economy cannot produce all that goods and services as required by its citizens.