Economic problem

The main reasons behind uncertainty and risks are  uncertain behavior of the market forces which are as follows:

• The demand and supply
• Changing business environment
• Government policies
• External influence on the domestic market
• Social and political changes

Economic problem:

Meaning of Economic problem:

To know the meaning of the term economic problem we have to put together the four characteristics i.e.

Human wants are unlimited.

Human wants vary in their intensity.

The means or resources are relatively limited.

There are alternative uses of the limited resources.

Therefore economic problem can be called as the problem related to the unlimited wants with limited resources. Problem arises due to this unlimited wants only. Resources used to satisfy one want cannot be used to satisfy the other want – it means that every man begins to face the problem of economizing his

means.

The problem of economy is how to use the relatively limited resources with alternative uses in the face of unlimited wants.

Every try to use his/her limited resources with alternative uses so that he gets the maximum satisfaction out of his limited resources.

Everyone tries to satisfy those wants which are most urgent or intense and then those wants slightly less urgent and so on thus sacrificing the satisfaction of those wants which lower on the scale of preference for

which he may not have resources.

This is known as the problem of economy--- how to make the maximum use of limited resources