Basic Economic Questions Flashcards, test questions and answers

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What is Basic Economic Questions?

The basic economic questions are the fundamental questions that all economies must answer in order to satisfy their population’s needs and wants. These questions provide the foundation for which an economy is based upon and require decision makers to think critically about how best to utilize resources. The three main economic questions are: what to produce, how to produce it, and for whom should it be produced. The first of these economic questions, what to produce, is concerned with what goods or services should be produced in order to satisfy demand. Each country has unique resources available that can be used when producing goods or services, making this decision important as it will determine which products will be in high demand and subsequently generate revenue. Decision makers must consider a variety of factors like cost effectiveness when deciding which products should be produced in order to maximize profits while still being affordable enough for consumers. The second economic question how to produce deals with the method of production used when creating goods or services. This decision requires knowledge on different technologies as well as data on the cost effectiveness of each method. Decision makers must also consider if the chosen production method is environmentally friendly so as not harm our planet further. Finally, for whom should it be produced refers to who should have access or benefit from the good/service being created? This question often sparks a debate between different sectors of society as some may argue that certain groups of people deserve priority over others due to their differences such as wealth or social standing. It is up for government officials and policy makers ultimately decide who gets access or benefit from products created by an economy based on a number criteria including need, affordability and fairness among others.