Basic Economic Problem

1.    What to produce  - is a question of the types of goods society desires. Will a third world country like the Philippines produce rice, copra, mangoes, bananas or will it be more profitable to produce handicrafts products such as bags,

 

tables and chairs etc? Or if our country will focus on the manufacture of industrial products. Since our resources are scarce or limited, no economy can produce every product desired by members of society.

 

2.    How much to produce – refers to the quantity of each good that will have to compose the total output. Assuming the Philippines decided to manufacture bags, how many bags should be manufactured? Or if rice production is decided on, how much should the total output be?

 

3.    How to produce - How to produce is a question on the techniques of production and the manner of combining resources to come up with the desired output. This basic question makes entrepreneur unique, why? Because these people or groups of people should address problems of scarcity such as, what materials should be used? Thus production needs more labor or the use of more machinery? How will the available resources be combined properly to come up with the most efficient output?

 

4.    For whom to produce – refers to the market wherein society should concentrate to sell their products. In economics, people are distinguishing the needs and wants of a human being and how they can satisfy them, nevertheless, will a particular product such as bags be sold in a high-income group or to lower-income buyers? Will the market be males, females, or children? Will the product be sold to local consumers or to the international market?

 

Answering the needs of the society would be impossible considering the factors of production is limited together with the basic economic problems, it can deprecate economic problem by determining the primary needs and how these goods and services should be shared among the members of society. But we cannot eliminate the existing economic problems.

Related Topics

·                     Introduction of Microeconomics 

·                     Scarcity

·                     Production possibilities

·                     Basic Economic Problem

·                      Circular flow of Economic Activity

·                      Common types of Economic System

·                     Economic resources

·                      Demand supply and markets

·                     Demand

·                     Supply

·                     Elasticity of demand and supply

·                     Market

·                     Surplus 

·                     Shortage

·                     Determinants of elasticity

·                     Theory of consumer behavior 

·                     Laws that aim to protect consumers.