Question:

What is the basic economic problem and how do we solve it?

-Use examples, graphs, or any, illustrations.

In economy, there are some basic problems that we need to face in order to be more
experienced in this subject. One of the most common problems found in the economy has
something to do with scarcity, the term scarcity in economics is defined as the limited number of
resource and the unlimited number of demand. According to the invisible hand theory made by
Adam Smith, the father of classical economics, the invisible hand theory is often presented in
terms of a natural phenomenon that makes free markets and capitalism in the direction
of efficiency, through supply and demand and competition for scarce resources, rather
than as something that results in the well-being of individuals.

In my first conclusion, the unlimited number of demands and the limited number of resource
caused the scarcity problem in economics.

There are some factors of production in the resources or supply category in order to function
properly, such as the human resource (Labor), Land (Place to work), Capital (Investment of
product), and the enterprise (CFO). However, most of these factors of the resource are limited.

There are some solutions to the scarcity problem, the best approach to this problem is by going
as efficient as we can be to the resources by going efficient we can use the resources longer, for
example: sell cheap products at a high demand, adjust the price, import the product if the domestic
supply is not enough. However, the demand is usually going higher since we focus more on the
efficiency of the resources than the demand. The second approach to the scarcity problem is by
modernizing the distribution system, modernizing the distribution system can vary from using
more delivery to building more roads for logistics. However, modernizing the distribution system
could be a waste of time and costly.