The Economic Problem Of The Market Economy - 1237 Words

The economic problem faced in the market economy is that there are an unlimited amount of wants with a scarce amount of resources. They only current solution is to make decisions as the desire of satisfying all wants is not possible. Economics is the about the allocation of limited resources in the best possible way in order to satisfy needs (items essential for survival – food and shelter) and wants (not necessities, but provide satisfaction and assist achievement of higher standard of living). In order to choose where to allocate resources, four fundamental questions must be attempted to be answered: 1. What to produce? 2. How much to produce? 3. How to produce? 4. How to distribute production? And with the usage of potential answers, opportunity cost (the loss of other alternatives when one alternative is chosen) occurs with every decision made. Individual consumers, business firms and the government are faced with the economic problem and must observe choices whilst considering the opportunity cost of these decisions which makes different economic factors such as individuals, businesses and the government address this problem in diverse ways. There are four fundamental questions, which assist addressing the economic problem when businesses need to prepare to produce goods and services: 1. What to produce? 2. How much to produce? 3. How to produce? 4. How to distribute production? Question one simply means that because of limited resources and unlimited wants,Show MoreRelatedThe Emergence Of Market Society1573 Words   |  7 Pagessociety has become a market. Societies used to consist of people that were governed by certain ideologies, laws, and practices. Being driven by capitalism, society has developed everything into a commodity, in which we now call a market society. Other socio-economic communities historically had concepts that were different from what is predominated in our present society. The emergence of market society establishes the great transformation from a traditional society to a market economy that has greatlyRead MoreConcept Of Market Failure And Its Aspects On Allocation, Production, And Distribution1580 Words   |  7 Pagesconcept of market failure and what might happen if government intervention is prosecuted. Also this essay will acknowledge the different aspects of one of the major topics in economics the scarce of resources and ità ¢â‚¬â„¢s aspects: allocation, production, and distribution. Furthermore in this writing academic literature and articles would be used in order to defend the outcome of the discussion about government intervention in the market. Economics are a complex matter which alters in time. Economics can beRead MoreHow Society Use Scarce Resources1281 Words   |  6 Pagesfind need for markets or financial institutions. Unfortunately we do not live in a utopia of limitless possibilities; we live in a scarce world of unlimited wants. Given unlimited wants, we must make the best use of our limited resources, a science our ancestors have developed and named economics. This study measures how societies use scarce resources to produce valuable commodities and distribute them efficiently among different people. Economic Disciplines The study of an economic world is a complexRead MoreWhy Unemployment Is Important?1384 Words   |  6 Pagesunemployment rate for the month of October in 2014 in the United States. Why talking about unemployment is important? Well, information about unemployment and other market forces will be very helpful to the reader when the time of talking and explaining how the neoclassical economics, market forces operating in the labor market, assure that the economy will not suffer from prolonged bouts or periods of high unemployment occurs. Economists define unemployment as: a person who is willing to work at the currentRead More1. Background The environmental problems that the world has been suffering from in the last 1001300 Words   |  6 Pages 1. Background The environmental problems that the world has been suffering from in the last 100 years, has make professionals from different disciplines ask themselves how to solve them. In particular, in the economics field it has push for the creation of two different subdisciplines: environmental economics and ecological economics. Environmental economics is a sub-discipline under the traditional economics field that emphases on present environmental issues. This sub-discipline emerged in theRead MoreThe Collapse of the Domino --- Chinese Real Estate1206 Words   |  5 Pagesmany people find out that China is walking on the old U.S. economic way, which means China will have economic crisis either. So right now, all the eyes from all the countries are watching at China’s economy, because if Chinese economic collapse, there are no more people buy Japanese animations and European luxuries. And after the economic crisis, China will recovery U.S. Treasury bonds, but American unable to pay, then the whole world economy is facing collapse; we can call that butterfly effect. SoRead MoreEconomic Systems Essay1117 Words   |  5 PagesIntroduction Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economic system is slackly defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. There are three types of economic systems exist, they are command economy, market economy, and mixed economy. Command economy is also sometimes called planned economy. The expectationsRead More Free Trade V.S. Command Economy Essay797 Words   |  4 PagesFree Trade V.S. Command Economy =============================== Introduction: Politicians, countries and ideologies from all over the world have for years been torn between what they should follow and believe. Countries quarrel over which policies should be adopted and what, how, for whom have been the economists fundamental question. Adam Smith preached for market economies often referring to the invisible hand Karl Marx preached for command economies often referring to The Read MoreNeoclassical Economics Vs. Keynesian Economics1583 Words   |  7 Pagesgrowth period, which is called Golden Age of Capitalism, has a great influence in human economic history. During the period of time, a great many of the capitalist countries have dramatically increased their economy and prosperity, such as United State which has a substantially economic expansion at an average rate of 3.5% annually between 1945 and 1970. Economic growth may be resulted by deregulation of market, rise of automotive manufacture and industrialization which contribute to freight transportationRead MoreImpacts of Wyoming’s Agriculture on Economy1372 Words   |  5 PagesWyoming’s economy includes four main aspects: agriculture, manufacturing, mining, and service. Among them, agriculture takes an important place in Wyoming’s economy. It contributes numerous billions to economy every year. There is a general evaluation of Wyoming’s agriculture from a website. â€Å"Historically, agriculture has been an important component of Wyoming’s economic identity. Its overall importance to the performance of Wyoming’s economy has waned. However, it is still an essential part of Wyoming’s