ESSENTIAL QUESTIONS IN ECONOMICS

These are the three essential questions in Economics:

(1)  What to Produce?   

Because of scarcity, the society cannot build everything it wants. Should a society build more roads or schools?  Choices have to be made.  Once a society determines what to produce, it then needs to decide how much should be produced.  In the economy market, the "what" question is answered in large part by the demand of consumers.

(2)  How to Produce?

The next question a society needs to ask after what to produce is how to produce the desired goods and services. Each society must combine available technology with scarce resources to produce the desired goods and services.  The education and skill levels of the citizens of a society will determine what methods can be used to produce goods and services.  For example, does a society possess the technology and skills to pick grapes with a mechanised harvester, or does it have to pick grapes by hand?.

(3)  For Whom to Produce?

The final question each society needs to ask is for whom to produce.  Who is to receive and consume the goods and services produced?  Some individuals have higher income than others. This means more goods and services in a society will be consumed by these wealthy individuals, and less by the poor.  Different groups will benefit from the different choices made about production