scarcity causes economic problem. how ?

Scarcity causes economic problem. No matter, how well a particular economy is endowed with resources, these resources will be relatively scarce to fulfil its unlimited wants. Moreover, these scarce resources have alternative uses and can be allocated to the production of different goods and services. Allocation of resources to any particular use involves a cost in terms of sacrifice of the other possible uses. To allocate the scarce resources in the best possible manner, an economy needs to analyse the cost (i.e. the opportunity cost) of allocating the resources to one use while sacrificing the other uses. Thus, it is due to the scarce availability of resources (having alternative uses) to fulfil the different and competing unlimited wants that an economy faces the economic problem or the problem of choice.

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