An economic problem arises when________

Step 1: Analyze the question The question asks what causes an economic problem to arise. This is a basic concept in Economics.

Step 2: Explain the concept The basic economic problem is scarcity. Human wants are unlimited, but the resources available to satisfy them (land, labour, capital, entrepreneurship) are limited. Because of this, people, firms and governments must choose how to use their scarce resources, and every choice means giving up something else (this is called opportunity cost).

So an economic problem arises when two things come together:

1. Scarcity: limited resources against unlimited wants.
2. Choice: the need to decide which wants to satisfy first.

Step 3: Evaluate the options

• A. Sellers are few: This describes a market structure (such as monopoly or oligopoly). It is not the root of the economic problem.
• B. Scarcity and choices are involved: Correct. This is the definition of the basic economic problem.
• C. Buyers are many: This relates to demand in a market. It does not define an economic problem.
• D. Money is in short supply: Money is only one resource. Economic scarcity covers all resources, not just money. Even a very rich person faces scarcity of time, for example.

Step 4: Answer The correct option is B. Scarcity and choices are involved.

Exam tip: Whenever you see "economic problem" in JAMB, think SCARCITY → CHOICE → SCALE OF PREFERENCE → OPPORTUNITY COST. This chain appears again and again in Economics questions, so memorise it.