basic economic questions

basic economic questions

in deciding how to use limited resources to satisfy people's wants, a society must consider three basic questions.what goods and services will be produce?how will they be produced? and for whom will the goods and services be produced?

what goods and services will be produced?

this is difficult and complex question. a portion of nation's limited resources must be used by the government services,including such things as national defense

the remaining resources are available for use in producing other goods and services . some these resource will be use to produce capital goods, such as factories ,machines,and tools .the rest will be available for production of consumer goods and services,suach as food medical care , bicycles, automobiles,and movies

consumer sovereignty.in some countries the government decides how many, and what kinds of, consumer goods and services wiil be produced .but in the use people (consumers) decide what will be produced - a process called consumer sovereignty. people vote( with their money) for the goods and services they want produced iff consumers do not buy a product in sufficient quantity to make its

production profitable,produces will discontinue making the product.if people demand more than is available,production will be increased

how will gooda and services be prodused?

there is often more than one way to produce a particular good or service.for example, suppose a construction.company has been hired to dig a large basement for a new building.the basement culd perhaps be dug by fifty workers using shovels and wheelbarrows or by one worker using a giant crane.the counstruction company, in competition with other companies for the job,must choose the most efficient and lest costly method of digging the basement.in this case,it would probably mean using one worker and the giant crane rather fifty workers equipped with shovels and wheelbarrows

competition forces producers to use the least costly methods of production.it allows consumers to buy goods and services at lower price than would be possible if less efficient, higher cost methods of production were used

for whom will goods and services be produced?

no nation can produce enough goods and services to satisfy all its citizens' wants.

it is necessary,therefore.to have some way of deciding who gets the things that are produced

in usa, goods andd services are distributed on basis of wealth.the people with the

most money get the most goods and services.while this may be an efficient way of deciding who gets what.it is not necessarily a fair way.people with the most money may not be the most deserving or the ones with the greatest need.nor do they necessarily work the hardest. some people who work very hard earn a small income.although some wealthy people have worked hard to get thir money,other have inherited muach of it