ECONS 101

 BASIC ECONOMIC PROBLEMS IN THE SOCIETY

Hey Guyz, Happy Friday. We made it to the last Friday of the month of February!!!. It’s such an honour to be ALIVE, don’t you think? So we didn't conclude the Topic- Basic Economic Problems- below is the conclusion of that topic. Pls Enjoy !!!.

FACTORS DETERMINING WHAT TO PRODUCE:

1.     Market Demand- The demand of a particular set of goods and services by customers may encourage producers to produce more of these goods and services. No producer will ever produce what is not demanded by the market.

2.     Type of Economy- This goes a long way in determining the type of goods and services produced in a country. For Example, In a Capitalist Economy, the Price System determines the type and quantity of goods and services produced bearing in mind that, profit is the major determinant of what to produce, whereas in a Socialist Economy the state controls and directs the allocation of resources.

3.     Availability of Resources- When resources for production are available and affordable. Producers will be encouraged to produce, but when resources are not available there will be no production. Since resources are limited producers may not always have enough to produce
commodities to satisfy human wants.

4.     Consumers’ Income- Producers take into consideration the earnings of its customers when deciding what to produce.

FACTORS DETERMINING HOW TO PRODUCE:

1.     Technological Advancement- The method of production adopted depends on the level of technological development of the state. Developing countries usually adopt Labour Intensive mode of production, while Developed countries adopt Capital Intensive mode of Production.

2.     Production Function- This is any analysis that shows the possible quantity of goods, by using each of the given alternative combination of resources that produces the largest quantity of output at the lowest cost of production. For example, Method A of producing Chocolate costs N 200,000 for 500 cartons, Method  B costs N 150,000 for 250 cartons and Method C costs N 130,000 for 600 cartons, a company producing Chocolate will choose Method C because it costs cheaper to produce chocolate and brings forth more products.

3.     Relative Cost of Factors of Production- The cheaper the cost of the Factors of production- Land, Labour etc, the more the production of goods and services to satisfy human wants and vice versa.

FACTORS DETERMINING WHOM TO PRODUCE FOR:

1.     Satisfaction of Wants- All goods and services are produced to satisfy human wants in the society.

2.     Level of Income- The higher the level of income of the consumers the more they will be willing to buy goods and services. But if the level of income is low, the purchasing power will be low as well and thus will lower the rate of production.

EFFICIENCY OF RESOURCE USE.

Efficiency of Resource use in production refers to the average use or combination of the factors of production to achieve higher and better output at a reasonable cost. It is thus a wise decision to ensure that the limited available resources are efficiently used to produce desired goods and services.

FACTORS DETERMINING EFFICIENT USE OF RESOURCES:

1.     Quality of Labour- Skilled Labour unlike unskilled labour used in production, could contribute to efficient use and effective use as well as allocation of production, reduction of wastage, savings in time and consequently an increase in the quality and quantity of output.

2.     Techniques of Production- The use of capital intensive mode of production which is the use of machines and equipment, may produce more goods and service, save time, reduce wastage and be more efficient than the use of labour intensive mode of production, which may waste time, produce less and increase wastage.

DIFFERENT ECONOMIC SYSTEMS

The World economy is sometimes classified into three namely:

i. The Capitalist System

ii. The Socialist System

iii. The Mixed Economic System.

THE CAPITALIST SYSTEM allows the operation of price mechanism to dictate major economic decisions. It can also be referred to as MARKET ECONOMIC SYSTEM. It is generally when productive resources are owned by individuals. The United States of America is a good example where individuals decision to produce is influenced mainly by their desire to male profit.

THE SOCIALIST SYSTEM allows the state or federal government own the means of production. it can also be called CENTRALLY-PLANNED ECONOMY. This is because all major economic decisions are made at the centre, individuals are not allowed to own the means of production. Russia is a classic example.

MIXED ECONOMIC SYSTEM most African countries belong to this system. It is a system where the Government owns a substantial portion of the major investments while private individuals are allowed to own a considerable amount of the means of production. In other words, Both Government and Individuals are partners in progress.

NOTE:  RESEARCH WAS CONDUCTED ON COMPREHENSIVE CERTIFICATE ECONOMICS FOR SENIOR SECONDARY SCHOOLS BY A ADERINTO AND SH ABDULLAHI. SOME PART OF THIS POST WAS CULLED FROM THE ABOVE MENTIONED BOOK. THANKS

Hope this was very helpful to you, leave a comment of what you think of this tutorial and your questions below. Have a Blessed Day and Remember You are Amazing. God Bless