Economic Questions

Resources are always limited. Regardless where you're at or from, resources are limited. In deciding how to allocate these limited resources, societies must answer three economic questions. The questions always remain the same. However, every civilization and country answers them differently.

QUESTION 1:

What goods and services are to be produced?

Scarcity lasts forever and limits what people can produce. Billions of things might be produced depending on location and what resources they have. Should the US steel industry produce more cars or use the steel for skyscrapers?

QUESTION 2:

How are goods and services to be produced?

Goods and services are produced by combining the factors of production: land, labor, and captial. There are many ways to produce a desired item. Who decides how the factors of production will be organized to make what people want?

QUESTION 3:

For whom are goods and services to be produced?

This question basically asks who gets what once the product is produced. In turn, this deals with what is fair and what is not. Each society differs in distributing goods and services. The simple answer is this: are we willing and capable of paying for the product. Government's influence can also determine how to distribute goods and services.