Every human society, whether it is an advanced industrial nation, a centrally planned economy, or an isolated tribal nation, must confront and resolve three fundamental economic problems. Every society must have a way of determining what commodities are produced, how these goods are made and for whom they are produced.
Indeed these three fundamental questions of economic organization- what, how and for whom are as critical today as they were at the drawn of human civilization. Let's look more closely at them:
What commodities are produced and in what quantities? A society must determine how much of each of the many possible goods and services it will make, and when they will be produced. Will we produce pizzas or shirts today?
How are goods produced? A society must determine who will do the production, with that resources, and what productions techniques they will use. Who farms and who teaches? Is electricity produced from oil, coal or from the sun?
From whom are goods produced? Who gets to eat the fruit of economic activity? Or, put it formally, how is national product divide among different households? Are many people are poor and a few rich? Do high incomes go to managers or athletes or workers or landlords?
Indeed these three fundamental questions of economic organization- what, how and for whom are as critical today as they were at the drawn of human civilization. Let's look more closely at them:
What commodities are produced and in what quantities? A society must determine how much of each of the many possible goods and services it will make, and when they will be produced. Will we produce pizzas or shirts today?
How are goods produced? A society must determine who will do the production, with that resources, and what productions techniques they will use. Who farms and who teaches? Is electricity produced from oil, coal or from the sun?
From whom are goods produced? Who gets to eat the fruit of economic activity? Or, put it formally, how is national product divide among different households? Are many people are poor and a few rich? Do high incomes go to managers or athletes or workers or landlords?
