Summary on Central Problems of Economies
Economic problems arise due to the scarcity of resources and are universal across all economies, encompassing three central issues: what to produce, how to produce, and for whom to produce. The allocation of resources to decide the types and quantities of goods and services involves choices between consumption goods versus capital goods, civil goods versus military goods, and necessities versus luxuries. The choice of production techniques, whether labour-intensive or capital-intensive, depends on the availability and cost of labour and capital. Lastly, the distribution of produced goods and services addresses whether to prioritize the needs of the wealthy or the general population, aiming to maximize societal welfare by focusing on essential goods for all before luxury items for the affluent.