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Provide a detailed explanation of how every society develops its own economic system because of the problem of relative scarcity.

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Provide a detailed explanation of how every society develops its own economic system because of the problem of relative scarcity A society has to decide how to allocate their resources in the most efficient way, and to do this it needs a system. This system is called an economy or economic system. The people in any society have many wants and needs, which are unlimited. All societies have resources, and these resources fall into three categories. They consist of land, labour and capital. Land is the free gifts or nature, such as products from the sea, minerals from the ground, forests etc. Labour is the physical and intellectual input of people. The capital is the goods, which are used to produce other goods and services, such as dams, roads, machinery, factories etc. ...read more.


A society will have to decide what to produce and for whom to produce, if it wants to provide a good business and attract buyers. We simply need an economy to run the whole country. We need an economic system to live, buy food, travel, pay rent or do anything else; it is a particular way of providing the needs of its people. What happens in a country can affect the rest of the world. People in some parts of the world are too poor to support themselves and have to be lent money by richer countries. The poor country is then in danger of being run by the rich country. If the Australian dollar is suddenly worth less overseas than it was, then our goods will cost less for other countries to buy and our exports will go up. ...read more.


Businesses will try to compete with each other in order to attract buyers; they do this by producing what people want and by improving the range of quality and characteristics of what they produce. In the Market economy, business aims to maximise profit by maximising the satisfaction of households. Market economies contrast with command or planned economies because governments and their agencies make decisions relating to resource allocation. Government planners tell managers what to produce, whom to sell it to, and what price to charge. All societies have their own economic system. Ours in particular is highly industrialized, and manufactured goods cover for most of the gross domestic product. Australia has valuable mineral resources, including coal, iron, bauxite, copper, tin, lead, zinc, and uranium; the country also raises of sheep and cattle. Australia maintains a favourable balance of trade, and runs very effective economy. Robert Struk ...read more.

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