SS1 First Term Economics Lesson Note – Basic Economic Problems of Society

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WEEK 10

DATE: ………………………………

TOPIC: BASIC ECONOMIC PROBLEMS OF SOCIETY  

Content

1. Definitions of Economic System
2. What to produce?
3. How to produce?
4. For whom to produce?
5. Efficiency of resource use

Sub-Topic 1:  BASIC ECONOMIC PROBLEMS OF SOCIETY

Meaning of Economic System

Economic System refers to the system by which a nation organizes the ownership, control and allocation of her resources in a bid to achieve national objectives.  It is the system by which answers are provided to the fundamental economic questions of what to produce, how to produce and who gets what is produced.

BASIC ECONOMIC PROBLEMS

The basic economic problems of society arise because of scarcity of resources. The way a society organizes itself to solve these problems determines the type of economic system it will practice. These problems to be examined are:

1. What to produce?
2. How to produce?
3. For whom to produce?
4. Efficiency of resource use

WHAT TO PRODUCE?

The question of what to produce arises because resources are scarce. Since we cannot have everything, we want, we have to set our priorities. In so doing, individuals, firms and the government are faced with the problem deciding on the type of goods and services to produce for society. This is what determines the allocation of productive resources in an economy. If more resources are to produce a commodity, fewer resources will be available for production of other commodities. The type of commodities produced depends on the needs of the society and the available human and material resources.

HOW TO PRODUCE?

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