One of the three economic questions deals with deciding

One of the three economic questions deals with deciding

A. what goods and services should be produced.

B. what the costs of production should be.

C. how goods and services will be marketed.

D. how consumers will receive products.

Answer: A. what goods and services should be produced.

This question refers to one of the three fundamental economic questions that all societies must address: Three questions address this problem: “What to produce?” “How to produce?” “For whom to produce?” These three questions embody the basic problems of economic organization as well as resource allocation in an economy.

One of the most important strategic questions is what to produce since resources are finite in a society and planning how they will be transformed into goods and services is of paramount importance. This decision concerns the choice of products which can meet the demand of the consumers in the society considering the available resources.

For example, a society can be faced with the question of what to prioritize for production; food, infrastructure, final consumer goods, or health services. These decisions are mutually exclusive and working to achieve one may lead to a compromise from the other. So, for instance, if a country establishes its strategic plan to allocate more resources to the development of armaments, it might have less capital for education or health care.

How to solve this question is answered in some diverse manners depending on the various economic systems. In a command economy, it is the central planners that make these various decisions. There is limited government intervention as the consumers’ taste and the desire of producers to make profits largely influence what is produced in the market economy. A mixed economy can be described as having some prostheses of both approaches.

Awareness of this basic economic problem assists in the evaluation of the way diverse societies allocate their requirements. This is one of the important concepts in the field of economics and determines the actions of governments and business owners, as well as the general economic growth.