The three economic questions *SCARCITY*

Unlimited wants and Limited resources lead to scarcity. Choices need to be made such as, What to produce, How to produce, and For Whom to produce.

WHAT TO PRODUCE

Since resources are scarce, a society must determine which goods it will produce and in what quantities. The production possibilities curve best illustrates this question. The curve shows all of the possible production combinations in a society. It must decide which of those combinations is the right one for it.

HOW TO PRODUCE

This concerns the methods of production that are used to produce goods and services. Since resources are scare, efficient methods of production must be employed. What exactly does efficient mean in this context?

FOR WHOM TO PRODUCE

Once society has chosen a point on the production possibilities curve, it will have some combination of goods and services that is available. It must also decide how to distribute those goods and services among the population. This is a complex question and the answer is not an easy one.

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