The economic problem can be described as attempting to satisfy the unlimited and ever changing wants of the consumer with limited resources. As these wants can never be satisfied, all individuals, businesses and governments are faced with the choice of what to obtain with those resources. As each consumer group's wants and resources varies greatly, each deals with trying to solve the economic problem in a different way.
The choices made by each individual are unique, depending on income, age, gender, living situations, education, voting, retirement and personal expectations. In order to deal with the economic problem, individuals must show preference for one good or service over another and be prepared to sacrifice many of the things that they desire. The individual must also plan how much of his/her income they will spend and how much they will save. This ratio can be difficult to establish and can change at any time.
Each individual is faced with the economic problem many times daily, and will continue to be faced with the challenge of choices.
Businesses too face the economic problem, but on a more complex level than the individual. A company must first decide what area of business that they will specialise in order to generate the most success. As businesses have limited resources they must focus these on a product or service that will hopefully generate a profit in order to continue operating. Once that is decided, the company must first price the product and then try to allocate its resources (land, labour, capital or enterprise) in order to maximise efficiency. In order to minimise costs, a company may have to choose between quality and quantity which can lead to difficult decisions purchasing equipment, employing/ paying reliable employees and obtaining supplies. Unlike the individual, a business must also contend...