Question

Question 2 (300-500 words)
Every society, regardless of its wealth and power, must make certain choices
about production and distribution. Specifically, every society faces three basic
economic decisions:
What goods and services to produce and in what quantities?
How to produce these goods and services, or how to use the economy's
resources?
Who gets these goods and services
Briefly explain how these questions are answered in your country. How does the
availability of resources in your country influence the economic decisions fo individuals,
organizations, and government?

Answer 1

What goods and services to produce and in what quantities?

This problem arises on the decisions of how to use the scarce resources. Thus, the economy needs to economise. Eg: A country may decide to produce either consumer or capital goods. America being a developed country demands both kinds of goods equally and thus resources would be used to produce both the goods and in quantitities that staisfies everbody and provides maximum aggregate satisfaction.

How to produce these goods and services?

This is basically the problem of choice of technique of production. An economy can either be labour intensive or capital intensive. For America, it is a capital intensive economy and makes more use of machinery and resources in such a way that the abundant resources are used the most than the relatively scarce resources i.e., trying to use the least cost combination of inputs.

How to use the economy's resources?

This is basically the problem of distribution of income among the economy in such a manner that benefit also trickles down to the lowest sections in the economy and everybody gets their fair share. In America, the income is distributed on the basis of functional distribution of income in form of wages, salaries, profits, interests etc., ensuring fulfillment of bsic minimum needs of all the groups.