Thursday, 21 June 2012

Basic economy problems

To achieve maximum satisfaction, people need making the best choice as the guide, so five economics basic question need to be answered first.

1. What to produces
· This problem is concerned with that goods and services will be produces.
· This problem was happen because limited factors of production but demand for the goods and services is not limited.
· So, the firms will produces goods base on demand of the goods and the goods must give the maximum utility to people.

2. How much to produces
· The firm must decide how many quantity of the product should be produces.
· So, it must be base on total demand for the goods.
· If goods are high demand, the firm must produces with the high quantity.

3. How to produces
· How the goods will produces, usually the firm will make decision either use the labor intensive or capital intensive.
· The producers will choice the intensive will decreasing the production cost.

4. For whom to produces
· This is the target market in to sell the product.
· This problem will cause the producer to decide to distribute the goods and services to society.
· The goods are distributing base on income of people.
· Usually, people with high income are able to consume more goods and services than people with low incomes.


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