Fundamental Economic Problems of the Whole Society

The productive factors are available in limited quantities and human needs are practically unlimited, this raises the inevitability of the choice. The need to choose is evident when considering the three fundamental problems to which every society must respond: What to produce? How to Produce? For whom to produce?

What to produce?

What bins and service will be produced and in what quantity? Will many consumer goods be produced as clothing, or will more attention be paid to investment goods such as factories, which will increase future consumption? Are there going to be many dresses of poor quality or little of a good quality? Will the production of material goods, such as food and automobiles, increase, or will the production of leisure services, such as concerts and theatrical shows, be increased?

How to Produce?

How will goods and services be produced? With what resources and with what technique will the companies produce? Which people will develop each one of the different activities? Will the energy used be from hydro, thermal, nuclear or solar power plants? Production will be primarily craft or so mechanized that even robots will be used? Will large companies be privately owned or publicly owned?

For whom to produce?

Who will the production be for? Who will consume the goods and services produced? In other words, how will the total national production be distributed among different individuals and families? Will it tend that the distribution of income is equal or, on the contrary, will allow very marked differences to occur?

Individuals decide what products and services they will buy, what profession they will devote to and how much money they will save. Companies decide what products and services they will produce and how they will produce them. Governments decide what projects and programs they will carry out and how they will finance them. These decisions are reflected in the State’s budgets. In any case, the key lies in the performance of a broad network of markets. To learn more about such economics related topics, you need to visit BusinessStudyNotes Business Study Notes is all about BBA, Mba, and & related studies and notes online. We may also say that the students of MBA, BBA, and & may easily get ready for their exams through business study notes.

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