Three Basic Questions Scarcity forces every society to

Three Basic Questions Scarcity forces every society to answer the basic questions of WHAT, HOW, and FOR WHOM to produce.

Three Basic Questions (cont. ) • We live in a world of scarce resources. Scarcity means that three questions should be answered. – What to produce – How to produce – For whom to produce

Three Basic Questions (cont. ) • WHAT TO PRODUCE – Should society direct most of its resources to the production of military equipment or to other items such as education, clothing, or housing? – Should the limited resources be used to build low-income, middle-income, or upper-income housing. – A society cannot have everything its people want.

Three Basic Questions (cont. ) • HOW TO PRODUCE – Should factory owners use automated production methods that require more machines and fewer workers, or should they use fewer machines and more workers? – If a community has many unemployed people, using more workers might be better. – Amazon video

Three Basic Questions (cont. ) • FOR WHOM TO PRODUCE – After a society decides WHAT and HOW to produce, it must decide who will receive things produced. – If a society decides to produce housing, for example, should it be the kind of housing that is wanted by low-income workers, middle-income professional people, or the very rich? – Never easy for any society to answer. – Societies do not have enough productive resources to satisfy everyone’s wants and needs. (The Fundamental Economic Problem)