The economic problem. Image credit

The economic problem. Image credit

ZIMSEC O Level Business Studies: The Economic Problem.

The Economic Problem

  • Arises because resources (factors of production) are limited and scarce
  • whilst human needs and wants are unlimited.
  • This leads to the┬áthree questions:
  • What to produce?
  • For whom to produce?
  • How much to produce?
  • The economic problem is also known as the basic economic problem, the central economic problem or the fundamental economic problem.

Allocation of resources

  • Since needs and wants are unlimited whilst resources are limited
  • This means that all goods that society requires cannot be produced
  • so in an economy the responsible authority has to decide on what to produce, for whom to produce and how to produce.
  • These are known as the three economic questions.
  • There are three general approaches to solving these questions:
  • Using a Free Market Economy
  • Using a Command/Planned Economy
  • Using a Mixed Economy

To access more topics go to the Business Studies Notes page.

Quick NetOne, Telecel, Africom, And Econet Airtime Recharge

If anything goes wrong, chat with us using the chat feature at the bottom right of this screen