Economic problem in the context of "Economic system"

⭐ In the context of an economic system, an inherent challenge requiring solutions through its structure is best described as…

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⭐ Core Definition: Economic problem

Economic systems as a type of social system must confront and solve the three fundamental economic problems:

  • What kinds and quantities of goods shall be produced, "how much and which of alternative goods and services shall be produced?"
  • How shall goods be produced? ..by whom and with what resources (using what technology)...?"
  • For whom are the goods or services produced? Who benefits? Samuelson rephrased this question as "how is the total of the national product to be distributed among different individuals and families?"

Economic systems solve these problems in several ways:"... by custom and instinct; by command and centralized control (in planned economies) and in mixed economies that "...uses both market signals and government directives to allocate goods and resources." The latter is variously defined as an economic system blending elements of a market economy with elements of a planned economy, free markets with state interventionism, or private enterprise with public enterprise..."

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👉 Economic problem in the context of Economic system

An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within an economy. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.

An economic system is a type of social system. The mode of production is a related concept. All economic systems must confront and solve the four fundamental economic problems:

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Economic problem in the context of Production possibility frontier

In microeconomics, a production–possibility frontier (PPF), production-possibility curve (PPC), or production-possibility boundary (PPB) is a graphical representation showing all the possible quantities of outputs that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time. A PPF illustrates several economic concepts, such as allocative efficiency, economies of scale, opportunity cost (or marginal rate of transformation), productive efficiency, and scarcity of resources (the fundamental economic problem that all societies face).

This tradeoff is usually considered for an economy, but also applies to each individual, household, and economic organization. One good can only be produced by diverting resources from other goods, and so by producing less of them.

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LINKED FROM (PARENTS)
← Economic system ← Production possibility frontier ← Production–possibility frontier ← Economic systems ← Economical ← Production-possibility frontier
LINKS TO (CHILDREN)
Economic system → Social system → Goods → Paul Samuelson → Gross domestic product → Distribution (economics) → Planned economy → Mixed economies → Market economy → Free market → State interventionism → Private enterprise → Public enterprise →