Answer to Question #317583 in Microeconomics for amcee

Question

list and provide a short explanation of three central economic questions

Answer 1

We need to understand the economic environment to recognize how businesses operate. Economics refers to the study of how goods and services are produced, distributed, and consumed. Economists evaluate the relations between businesses and households and study how factors of production are combined to produce the goods and services that individuals require. Additionally, economists must also make choices to cater to the problem of scarcity. Therefore, they must answer the central economic questions which influence the choices to be made. The central economic questions include:

• What to produce?

What goods and services to produce with inadequate resources? When to produce them? In what quantity?

Using limited resources, can a farmer grow a crop?

• How should goods and services be produced?

Who has the role of producing the goods and services, and what resources, comprising technology, should we combine to produce them?

• Who consumes the goods and services produced?

This involves who receives the goods and services and how they should be allocated to consumers.