1.4 The three fundamental questions Flashcards
What goods and services to produce. How to produce the goods and services. For whom to produce.
What goods and services to produce?
All the goods and services that people need and want cannot be produced, so we need to decide what is the best combination of goods and services that we should produce.
It is very complicated because we need to decide what kind and the quantity that must be produced.
Example: What kind of food and how much. What kind of houses and hou much.
How to produce the goods and services?
a Product can be produced by using different combinations of scarce resources and the challenge to society is to find the most effiently way of producing goods and services.
The more effectively and efficiently resources are used, the more goods and services can be produced, and the more needs and wants can be satisfied.
Efficient and effective use of scarce resources contributes to economic growth and the wealth of our nation.
For whom to produce?
We produce goods and services to satisfy people’s needs and wants. It deals with the distribution of goods and services.
