What are the basic economic questions and explain how it is related with economic resources of the country?
Question
What are the basic economic questions and explain how it is related with economic resources of the country?
Solution
The basic economic questions that every society must answer are:
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What to produce? This question addresses which goods and services a country should produce based on its resources. It involves choosing between different items that can be produced with the available resources.
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How to produce? This question deals with the methods of production. It involves deciding on the techniques or processes to use in order to produce the chosen goods and services. This could be labor-intensive, capital-intensive, or a mix of both.
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For whom to produce? This question is about the distribution of goods and services. It involves deciding who will receive the produced goods and services. This could be based on wealth, need, or other factors.
These questions are related to the economic resources of a country because the answers depend on the resources available. The resources of a country include natural resources, labor, and capital. The availability and quality of these resources determine what can be produced, how it can be produced, and who can afford to consume the produced goods and services. For example, a country with abundant natural resources might focus on producing goods that utilize these resources. A country with a highly skilled labor force might focus on producing services that require high skill levels. And a country with a high level of income inequality might have a large portion of the produced goods and services going to a small portion of the population.
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