Why Does an Economic Problem Arise? Explain
By BYJU'S Exam Prep
Updated on: November 9th, 2023
An economic problem arises when the resources are not enough to fulfill the desire of the consumers. The level of consumer demand should be met by the number of goods and services produced. When it isn’t, consumer dissatisfaction develops, which causes a situation of economic difficulties. The main causes of economic issues are an insufficient supply of resources like labor, land, and capital relative to demand.
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Rise of Economic Problem
The needs and desires of people are limitless and continue to grow. Therefore, due to a lack of resources, they cannot be satisfied. There are numerous causes of economic problems. Disproportions between consumer demand and resource availability are the root cause of economic issues. Existing resources would not be sufficient to meet demand when it is infinite or disproportionately high.
Similarly, when there is a scarcity of resources like land, labor, and capital, consumer demand will remain unfulfillable. As a consequence, economic problems will arise. The other reasons why the economic problem arises are:
- The situation of economic problem arises when the resources are not enough to fulfill consumer demands.
- The scarcity of essential resources such as land, capital, labor, etc. can lead to economic problems.
- When consumer demand grows in a disproportionate manner, the existing resources might deplete, causing economic problems.
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