Explain the 3 economic questions that all economic questions that all economies face because of the basic economic problem.
The basic economic problem is there are scarce resources to produce wants and needs of the people. So firms confront the three basic economic questions of what to produce, how to produce and for whom to produce.
As we cannot produce everything, we need to decide what to produce and in what quantities. It determines the allocation of scarce resources amongst alternative uses. So we have to choose for example, whether to produce lots of goods and services, such as food, clothing and vehicles to improve our standard of living or whether we to produce lots of military hardware to improve our defenses.