Q1.Discuss the fundamental nature of Management Economies with respect to the three choice problems of the economy.
Answers
A close relationship between management and economics has led to the development of managerial economics. The three choice problems that have become the three central issues of an economy are:
1. What to produce?
2. How to produce?
3. For whom to produce?
Economics has developed several concepts and analytical tools to deal with the question of allocation of scarce resources among competing ends.
There are three ways by which this can be achieved. One, entirely by the market mechanism, two entirely by the government or finally and more reasonably by a combination of the first two approaches. Realistically all economies employ the last option, but the relative roles of the market and government vary across countries.
According to the central deduction of economic theory, under certain conditions, markets allocate resources efficiently. The theory says that markets will produce an outcome such that, given the economy’s scarce resources, it is impossible to make anybody better-off without making somebody else worse-off.
Balancing between the consumption expenditure and the reveneue at hand is a very key aspect when it comes to the economy of any given country or nation, The debt and the amount owed or ownig is another thing that should be put in place, the country should spend much than what is able to produce, thyis will distabilize the economy and render many into the substandard kind of living.