Question

The Economic Problem is a fundamental problem of Economics

Write an 800 words essay about this.

Identify the key concepts relevant to answering the question

Links these concepts together and logically to make an argument that runs through the whole essay.

•             State the main theoretical concepts - Definitions ( Expect min 4 max of 5)
•             Explain briefly how each theoretical concept defined works           
•             Illustrate the theory – for the main concepts draw a Graphs or a Diagram
•             Use examples from real world
•             Evaluation - Do these theories always works in real world

Answer 1

The Economic Problem is a fundamental problem of Economics

Write an 800 words essay about this.

Identify the key concepts relevant to answering the question

Links these concepts together and logically to make an argument that runs through the whole essay.

•             State the main theoretical concepts - Definitions ( Expect min 4 max of 5)
•             Explain briefly how each theoretical concept defined works           
•             Illustrate the theory – for the main concepts draw a Graphs or a Diagram
•             Use examples from real world
•             Evaluation - Do these theories always works in real world
• Answer: there are three fundamental problems faced by an economic system.
• These three problems are
• 1- what to produce how much to produce
• 2-how to produce
• 3- for whom to produce
• 1 what to produce and how much to produce: the first problem of the economy is what commodity to produce and in what quantity. As our economy have limited resources that is scarcity of resources is available than to calculate national income there is need to evaluate what commodity a economy have to produce and in which quantity so that resources can be utilised fully. There is need to plan according on the basis of resources available.
• The second problem of the economy is how to produce. We know that some countries are labour intensive and some are capital intensive. There is need to understand what quantity of labour and capital is required to produce a commodity.
• Third problem of the economy is for whom to produce here we know that different individual have different purchasing power according to their income. Some individual have high purchasing power whii some have low puri power. So before producing any commodity there is need to analyse whether the product is producing for capitalist economy or the working class.
• We can apply six social goal to solve the three basic problems faced by economy.
• Six social goals are
• 1- efficiency 2- equity 3- freedom
• 4-growth 5-security 6_ stability
• Efficiency can be achieved if we use available resources Efficienctly supposi in a digram given below PPP curve is drawn showing different combination of commodity X and commodity Y .So using production possibility frontier curve a economy can use their resources efficiently.
• 
• PP' is the PPP curve on this curve economy will be on efficient allocation of resources and there will be no problem of scarcity
• To generate equity is very essential government can establaise economy by imposing tax on rich people and giving money to poor. So inequality in the economy can be reduced.
• There will be also freedom given both to producers and the household that is what factor of production is to used and household have been given the right how much to supply the factors  
• Growtt can be increased only by producing more. By increasing productivity. If production increase than income increases and per capita income also increase leads to increase in growth.
• Security which is provided by the government both internally and externally. Rxtert security is security by foreign attack by providing defense force. And internal security is economic security means providing necessities.
• Stability should be maintain in the business cycle. Regular fluctuations in business cycle should be maintained so that no excess unemployment will produced in the economy.
• The whole situation is related to our regular basis activities so all points is applicable in our life. That is in our whole society.
• Thank you hope answered your questions.