1.1.1 The Economic Problem

Question 1

What is the basic economic problem ?

Answer 1

Scarcity - refers to the shortage of resources in relation to the quantity of human wants

Question 2

What is the problem of scarcity ?

Answer 2

Gives rise to opportunity cost - the value of the next best alternative forgone

Question 3

When producing goods, the economy has to consider what?

Answer 3

1. What to produce?
2. How to produce it?
3. For whom to produce?