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What is Economic Problem and When Does the Economic Problem Arise?

Economic Problem:

According to the economists, a problem of choice is an economic problem. It can easily be explained in the light of Prof. Lionel Robbins’ definition of economics. According to Robbins “Economics is the science which studies human behaviour as a relationship between multiple ends and scarce means which have alternative uses”.

We can conclude from the above definition that

  1. Human wants or ends are unlimited.
  2. Human wants are different in importance.
  3. Resources to fulfil human wants are limited.
  4. Resources have alternative uses.

When Does the Economic Problem Arise?

According to Robbins, an economic problem exists when he above mentioned four conditions exist at the same time.

It is clear from the above points that to satisfy unlimited wants which are of varying importance we have scarce means, wealth or resources. With these scarce means we try to satisfy unlimited wants but wants are appearing and reappearing therefore, we reach again on a point of unlimited wants and we are facing economic problem. Therefore, we make a choice between unlimited wants and scarce means.

When Does the Economic Problem Not Arise?

If any one of these four conditions are not present then no economic problem will exist at all.

Human desires become limited.

Firstly, if the wants are limited and countable then, the limited wants can be satisfied with scarce means and once these limited wants are satisfied no economic problem will arise because there will be no need for economic activity.

Human desires do not differ in importance.

Secondly, if the wants are unlimited but their importance does not vary even then, there will be no economic problem because we need not to chose which want should be satisfied first and which later on, we shall go on satisfying wants without any problem.

Human beings have unlimited resources to satisfy their desires.

Thirdly, if the means to satisfy unlimited wants are not scarce but are also unlimited then there will be no economic problem. Because unlimited wants will be satisfied with unlimited means.

Resources satisfying unlimited human desires have no alternative uses.

Fourthly, if scarce means have not alternative uses and one mean can satisfy only one want, there will be no economic problem because we need not to choose.

In the above situation, when a person or a nation has multiple means to satisfy wants, will neither face any economic problem, nor take part in the economic activities.


Munir Ahmed Bhutta. Economics, Azeem Academy Publishers, Lahore.

Abdul Haleem Khawja. Economics, Khawja and Khawja Publishing House, Islamabad.

Manzoor Tahir Ch. Principles of Economics, Azeem Academy Publishers, Lahore.

Muhammad Irshad. Economics, Naveed Publications, Lahore.

K K Dewett & M H Navalur. Modern Economic Theory (Theory and Policy), S. Chand Publishing.


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