WHAT IS THE ECONOMIC PROBLEM AND WHY DOES IT ARISE?


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. The economic problems arise when:

• Human desires are unlimited.
• Human desires are different in importance.
• Human beings have limited resources to satisfy their desires.
• Resources satisfying unlimited desires have alternative uses.

The presence of the above mentioned aspects of desires and means compel people to make choice between more urgent and less urgent. People participate in different economic activities to create means and satisfy maximum of their wants and this is a continuous process.

WHEN DOES THE ECONOMIC PROBLEM NOT ARISE?

Economic Problem does not arise when:

• Human desires become limited.
• Human desires do not differ in importance.
• Human beings have unlimited resources to satisfy their desires.
• Resources satisfying unlimited human desires have no alternative uses.

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.

WHETHER ECONOMICS CAN SOLVE PRACTICAL PROBLEMS?


Our satisfies maximum of his desires on priority  basis. He achieves his satisfaction up to a maximum level with the help of available and alternatively used resources. Similarly, a community also utilizes her natural and artificial resources, time and manpower to maximize her social benefits in the light of various policies formed by the experts and on return results into achieving higher standard of living. Through the application of all economic policies, laws, principles and methods an economy can become able to get full employment level without inflation or deflation. Thus, economics can solve the practical problems.

According to Prof. Dr. J. M. Keynes 

"Economics is a method rather than a doctrine, an apparatus of mind, a technique of thinking which helps its experts to draw correct conclusions."

 According to Prof. A. C. Pigou

"Our impulse is not the philosopher's impulse, knowledge for the sake of knowledge but rather the physiologist's knowledge for the healing that knowledge may help to bring."