Question

describe the three core choices of economics. Why do they arise?

Answer 1

The three core choices in Economics are choice of what to produce, choice of how to produce and the choice for whom to produce. All these choices are under the problem of allocation of resources which are limited. The choice of what to produce means in an economy we take the decision of what are the commodities are produce in an economy and in what quantity. The choice of how to produce means to choice between the technologies. It arises because there are two types of technologies in an economy, labour intensive and capital intensive technologies. Using more labour and less capital in the production of a commodity is called labour intensive technology. Using more capital and less labour is called capital intensive technology. The choice for whom to produce means the distribution of national income among the factors of production in the economy. All these choices are arises only because of the availability of resources which are limited to satisfy the unlimited wants in an economy.