Grade 9 Economics Unit 2 Part 5

Grade 9 Economics Unit 2 Part 5 9ኛ ክፍል ኢኮኖሚክስ ትምህርት Basic Economic Questions scarcity of resources are known as basic economic problems. These problems are common to all economic systems. They are also referred to as central problems of an economy. Consequently, every modern society should answer the following three basic questions: What goods and services are to be produced? How to produce goods and services? For whom goods and services are to be produced? 1 What goods and services are to be produced? This question is also called the problem of the allocation of resources. It implies that every economy must decide on the type and quantity of goods to be produced. The economy must make choices between the productions of: Consumption and capital goods, Civil and military goods, and Necessity and luxury goods 2. How to produce goods and services? This question is also referred to as the problem of choice of technique. After deciding types & quantities of goods and services it must decide how to produce them, Choosing between alternative methods or techniques of production. For example, Wheat can be produced using primitive tools and manual labour, or Using modern machinery and some labour The various techniques of production can be classified into two groups: Labour-intensive techniques and Capital-intensive techniques labor-intensive technique involves the use of more labour, relative to capital, per unit of output. capital-intensive technique involves the use of more capital, relative to labour, per unit of output. The choice between these techniques depends on available supplies relative prices good choice is important for making the best possible use of limited resources to produce the maximum number of goods and services. For whom are goods and services to be produced? This problem is also called the problem of the distribution of the national product of a country. It relates to how a material product is to be distributed among the different members of a society. for instance, whether to produce for the benefit of a few rich people or for the majority of poor people An economy the benefit of the maximum number of people focus on the production of necessary goods for the whole population, then on the production of luxury goods.