Analyse the Different Ways in Which Countries Can Attempt to Overcome the ‘Basic Economic Problem’.

Topics: Economics, Market economy, Mixed economy Pages: 2 (2053 words) Published: December 2, 2012
Firstly, the economic problem is split into three questions, which are: what to produce? How to produce? Who to produce for? These three questions can also be summed up as scarcity which is the inadequate amount of resources available. Consumers have wants which are unlimited; they would always want more, but due to the economic problem, scarcity, not everyone will get there ‘want’ fulfilled, therefore causing a problem. Different countries can attempt to overcome the economic problem in several ways; which is to apply a different economy system to their country. Due to scarcity consumers will now have to make a choice of what they want, by sacrificing the next best alternative when making a decision, this is known as opportunity cost. This is an example of an opportunity cost. “Airport operators like the GMR-led DIAL and GVK-led Mumbai International Airport Limited (MIAL) have argued that they could have invested the money raised in the form of security deposits from this land in any other venture they wanted.” Vikas Dhoot. (2012). Airport operators want opportunity cost for land security deposits. Available: Last accessed 26th October 2012. Scarcity is fluctuated by the factors of production, when there is little factor of production the higher the scarcity and when higher the factor of production the lower the scarcity level. Factor of production combined create goods and services for consumers; these factor of production consist of labour, land, capital and enterprise. Labour are the individuals/employees who are part of this project to create goods and services for consumers. Labours are awarded with wages/salaries for their human effort in production. Land is the natural resource available, and this could be let out to firms, as the firm would pay them back via rent. Capital are assets used to produce goods, these are things as...
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