What is the main economic problem that economics studies?

The main economic problem that economics studies is scarcity. Scarcity refers to the fundamental issue that resources are limited while human wants and needs are virtually unlimited. This central concept shapes the field of economics, as it compels individuals and societies to make choices regarding how to allocate their limited resources effectively.

Because of scarcity, economic agents must prioritize certain goods and services over others, leading to the need for a system of resource allocation, whether through markets or other means. This foundational understanding of scarcity helps explain why the study of economics is vital for making informed decisions in various areas, such as production, consumption, and policy-making.

Inflation, trade imbalance, and recession are indeed important economic issues, but they are manifestations or consequences of deeper underlying problems related to scarcity. For instance, inflation can result from excess demand in relation to limited supply, trade imbalances stem from differences in resource availability and consumer preferences, and recessions can occur in response to misallocations of scarce resources. However, scarcity remains the overarching economic problem that necessitates these and other related studies.