The Key Economic Issues
Economists must attempt to solve the following questions:
What to produce?
Due to limited resources, we are unable to satisfy all individual and collective wants and must therefore decide which wants to satisfy and which ones to forgo. The first issue in economics is the decision of which goods and services to produce.
How much to produce?
The issue of allocating limited resources efficiently to achieve the maximum satisfaction. An economy must decide how much of each good and service it will produce. Producing extra will lead to an excess and wastage of resources however producing too less will leave some individuals unsatisfied.
How to produce?
An economy must look for the most efficient method of production that uses the least amount of the economy’s resources while simultaneously achieving the maximum satisfaction possible.
How to distribute production?
After producing a certain quantity and quality of goods and services, an economy must decide on how to distribute their products through the population. In the modern day, an individual’s share of the economies production depends on their income level which is determined by their level of contribution to society. Economies must decide between an equitable (more even) distribution or a more inequitable (uneven) distribution.