Chapter 3 Basic Economic Questions Paper

There are three fundamental questions all economies must answer that concern the problem of how to distribute society’s scarce resources. The three basic questions include; what will be produced, how will items be produced, and for whom will it be produced. These questions must be answered to help meet the needs of its economic people. An economy must decide what scarce resources it will use to produce, along with whether it be a good and/or service. After selecting which resources will be produced, an economy will need to decide how it will produced, which may be labor workers, machines or a combination of both. From there an economy should then decide how these produced goods/services can be distributed to the people of the economy’s society. Answering these three fundamental economic questions depends on that nation’s economic system (Miller).
Economic systems help organize the production and distribution of goods and/or services. “The system that a society chooses reflects the philosophical and political ideas on which that society is founded” (Encyclopedia). There are three main types of economic systems which include the centralized command and control system, the …show more content…
The centralized power in this type of economic system decides exactly what resources will be used to produce and how many of each. Therefore, determines how the rare resources will be organized in the items’ production and identifies who in society will be able to obtain the items (Miller). There are a few examples of the most well-known countries with command economies which include China, Russia and North Korea (Amadeo). Within this economic system the government is typically one of the main focuses of the economy. The government is very much involved from planning to distributing it economy’s resources