The main problem of an economy is of economizing scarce resources. In this sense economics is the study of the allocation of scarce resources to alternative ends. The problem of scarcity arises because human wants are numerous and the means to satisfy them are limited. This leads to the problem of choice-of selecting alternative uses to which scarce resources can be put. The solution to this problem of allocating scarce resources lies in the pricing system. This exists in every economic system, whether it is capitalist, socialist or mixed economy. For this the economic system must solve five basic problems.
Note: This is published for the internal use (of St. Philomena's College students) only and hence requires verification.
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