The fundamental economic questions, also known as the central economic questions, are the fundamental issues that arise in any economic system. They revolve around the allocation of resources and the production, distribution, and consumption of goods and services. The three fundamental economic questions are:
What to produce? This is a result of scarce resources implying that, there must be choice between the alternative goods and services that might be produced.
Where to produce? This is concerned with the location of the production unit, whether the industry should be located near the source of raw materials, or near the market.
When to produce?The society is faced with the choice of having production for present consumption or delaying production and having more goods and services later.
How to produce? There must be a decision on what technique to use in production and this decision is basically dependent on the labour skills and capital equipment used.
For whom to produce? A decision must be made about who must receive the goods and services produced. However, this depends on the extent to which the individuals in the country are free to choose their own basket of goods.
These fundamental economic questions reflect the core concerns that economic systems need to address. Different economic systems, such as market economies, command economies, and mixed economies, offer different answers to these questions based on their underlying principles, institutions, and mechanisms of resource allocation.
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