The economic problem

The fact that resources are scarce and our wants are infinite gives leads to the basic economic problem. How do we allocate the limited resources so that society can receive the maximum benefit?  Your own point of view will affect how you answer to this question.  There are three basic questions that need to be answered in order to solve the economic problem:

  • What should we produce given the scarce resources available?
  • How should we produce it?
  • For whom should it be produced for?  Who is going to receive the goods and services once they have been produced?

 

Economics attempts to answer these questions.

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