What is the basic economic problem that all societies face?

The basic economic problem that all societies face is scarcity. Scarcity arises because resources are limited while human wants and needs are virtually unlimited. This fundamental condition forces societies to make choices about how to allocate their finite resources effectively. Every society must decide what to produce, how to produce it, and for whom to produce, which requires prioritizing certain goods and services over others.

Scarcity exists regardless of the wealth or technological advancement of a society; it encapsulates the idea that there is never enough of a resource to satisfy all of our desires. This concept is fundamental in economics, guiding the study of resource allocation and the creation of policies to address shortages and inefficiencies.