the economic problem?

Question

I was taught that there are four ways to solve the economic problem:
how much to produce, what to produce, how to produce and the whom to distribute.
however, i dont understand how these questions may help solve teh economic problem, theyr'e just simply questions itself, how many it sovle teh economic problem?? for school assessment desparatly.!

Answer 1

If this is for a school assessment, it should reflect your understanding, not ours.

Suffice it to say that The Economic Problem is one of resource allocation. The four ways you mention are really four sub-questions, each of which depends on the other in order to answer The Economic Problem.

For instance, knowing that you must produce syrup does not tell you whom to produce it for, what inputs or process you should utilize for production, nor how much syrup to produce to meet your market demand (even indeed what that market demand is).

In order to allocate the resources pertaining to the Syrup Solution, you must know what quantity should be produced, which implies you must know your market, and knowing your market will tell you also where to transport it to (and hence where to locate your production facilities), as well as what process to utilize (particularly bearing in mind what scale of production would allow for greatest efficiency, and also whether your market would prefer organic syrup or doesn't mind anything made in the factory so long as its cheap, for example).

Hence, all four questions are merely perspectives on The one Economic Problem.

Answer 2

Look at each of these questions separately.

For instance, What to produce? You would not market snow gear and ski equipment to people who live in warm climates. The business would fail.

Before you can answer the questions, you need to do a market analysis and research about market conditions. The four questions are a guide that forces you to make sensible choices.

Let's say you move to a new area. You love a good pizza, but the only restaurants in town are cheesy chain stores. You decide to open a pizza restaurant.

But first, do your homework: Poll the public to find out what kind of pizza they like (what to produce?). It's possible they like the yucky kind served already. So you go on to a new venture. If they want your business, you plan the restaurant.

To make your restaurant successful: You need to decide the most efficient way to make the pizzas (production). How many different pizzas to serve ? The hours of the business and whether it's a sit down or take out restaurant (distribution).

How do the questions solve economic problems? They allow you to do a serious inquiry for the business model.

Answer 3

Those 4 questions in no way answer 'the economic problem'.

'The economic problem' is defined as 'limited resources for infinite human wants'.

What exactly is the question for your assessment and I might be able to help.