Economics is the study of human activities which they perform with their limited resources to satisfy their unlimited wants.
Due to unlimited wants the concept scarcity arise which means the resources are scarce to satisfy our unlimited wants. But the resources have alternative uses. And this problem of limited resources, having alternative uses give arises to the problem of choice. The problem of choice is also called economic problem. This means the optimum utilization of scarce resources which have alternative uses.
This topic can be explained with the help of an example:
Say your parents have gave you Rs. 1000 for your birthday. Now you can spend it in four different ways.
- You can have party with your friends.
- You can go to a restaurant with your family.
- You can buy a new dress
- You can go to watch movie with your friends.
The example is showing that you have limited resources means you have only Rs. 1000 but you have alternatives to spend it in different ways. Here arises the problem of choice or economic problem, where we have not only scare resources but also alternative uses. So a rational consumer will spend his/her money in such a way which will give him/her maximum satisfaction.
This is all about concept of economics and economic problem.