1.5 ECONOMIC PROBLEM & THE OPPORTUNITY COST

What is an 'economic problem'?

Problems that arise due to:

1. scarcity in natural resources - basically the diminishing of clean waters, healthier lands, clean air , the chopping down of trees without taking into account of re-planting them to maintain nature's balance. 
2. scarcity in skills/human resources - the lack of skill or expertise knowledge that prevents people from creating new, innovative products

These scarcity in resources causes wants and needs not to be met - hence businesses only produce what they can with the resources they have. 

This means they would have to choose what they can produce, letting go of the idea of not producing something else that could also be very important to be produced = this is called Opportunity Cost. 

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