Explanation The three fundamental questions of economics concern the problem of how to allocate society’s scarce resources. These fundamental questions need to be addressed by every nation’s government or ruler. It is the way by which the economic state of the nation can be assessed in terms of production along with it effective utilization of the resources to minimize wastage & produce maximum output. What and how much will be produced? Some mechanism must exist for determining which items will be produced while others remain inventors’ pipe dreams or individuals’ unfulfilled desires. How will items be produced? There are many ways to produce a desired item. It is possible to use more labor and fewer machines, or vice versa. It is possible, for instance, to produce an item with an aim to maximize the number of people employed. Alternatively, an item may be produced with an aim to minimize the total expenses that members of society incur. Somehow, a decision must be made about the mix of resources used in production, the way in which they are organized, and how they are brought together at a particular location For whom will items be produced? Once an item is produced, who should be able to obtain it? People use scarce resources to produce any item, so typically people value access to that item...

Economics Today: The Micro View, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (19th Edition)

19th Edition

ISBN: 9780134641959

Author: Roger LeRoy Miller

Publisher: PEARSON

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Question

Chapter 1, Problem 1.2LO

To determine

Three basic economics questions along with the emphasis of the two opposing sets of answers

Concept Introduction:

In every nation, three fundamental questions must be addressed irrespective of the form of its government or who heads that government, how rich or how poor the nation may be, or what type of economic system —the institutional mechanism through which resources are utilized to satisfy human wants—has been chosen. These are:

What and how much will be produced?

How will items be produced?

For whom will items be produced?

The two opposing sets of answers discuss how a nation’s residents go about answering the three basic economic questions. The two opposing answers to these questions are provided by the type of economic system: either centralized command and control or the price system

Expert Solution & Answer

Chapter 1 Solutions

Economics Today: The Micro View, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (19th Edition)

Ch. 1.A - Prob. 1P Ch. 1.A - Prob. 2P Ch. 1.A - Prob. 3P Ch. 1.A - Prob. 4P Ch. 1.A - Prob. 5P Ch. 1.A - Prob. 6P Ch. 1.A - Prob. 7P Ch. 1.A - Prob. 8P Ch. 1 - Prob. 1.1LO Ch. 1 - Prob. 1.2LO

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