Question

Discuss the three following fundamental problems (what, how and for whom) of economics.

What goods and services are being produced?

How goods and services are being produced?

For whom goods and services are being produced.

Just explain little bit about these three problems.

Answer 1

i) What to produce means which goods are to be produced and which aren't to be produced. It also means what quantity of those particular goods are to be produced. As we know resources are limited while human wants are unlimited, hence it isn't possible to produce all the goods rather the decision of production is to be made on selected basis. A society has to make a choice among different kinds of goods while taking quantity as well into consideration.

ii) After deciding which goods are to be produced a society has to take a call about the combination of resources to be employed for producing such kind of goods. It has also to choose among the various alternative methods of producing goods. These various alternative methods will use various resources in different quantities.

iii) For whom to produce’ means how the goods so produced are to be distributed among the population. In other words, it means means who should get how much of the goods and services so produced.