WHAT PROBLEMS DOES THE ECONOMY ADDRESS? - CULTURE VOCABULARY - 2025

The problems that economics tackles vary less from one branch to another. Some are related to social needs, others talk about poverty, inflation and the unemployment rate of a nation, while many others talk about the Gross Domestic Product (GDP) of countries or the behavior of consumers in those countries.

In general, the problems that the economy deals with are diverse and study variables at the global (macro) and local (micro) levels. For this reason, the economy can speak both of resource allocation, production possibilities, or variables of growth and economic development of a specific sector (Inc, 2017).

In general, the basis of the problems addressed by the economy is based on the satisfaction of human needs. In this way, it tries to analyze the best way in which resources should be arranged in order to achieve a specific human purpose.

Economics primarily analyzes the use of both tangible and intangible resources. In this way, it focuses on the study of issues related to material goods, merchandise, services and the productive capacity that exists for their elaboration (Association, 1974).

Main problems addressed by the economy: goods, merchandise and services

The economy deals with problems related to those goods that are not derived only from natural resources, but also from human initiative (physical and mental actions). This includes a wide variety of objects made by man, with effort, creativity and inventiveness.

In this way, economics studies the subsequent use of these objects within a given industry.

All the resources that come from man's inventiveness are called factors of production and what results from their use is known within the economic sphere as goods or merchandise, when they are tangible and services when they are intangible (Pheby, 1998).

Despite the fact that goods and services are located on different physical planes, both are responsible for satisfying the individual or collective needs of human beings, and this is what the economy is mainly focused on.

The importance of the use of certain goods only occurs to the extent that they can satisfy a greater amount of human needs.

Manufacturing and consumption

The economy does not only address problems related to the goods and services necessary to satisfy human needs. It is also in charge of analyzing the process necessary for the elaboration of said goods and services (manufacturing or production) and their subsequent acquisition by human beings (consumption).

We always start from the possibility of satisfying human needs through the consumption of tangible and intangible goods. Many individuals believe that, being in a permanent state of consumption, human beings should reach a limit.

However, human needs are varied and transform over time, for this reason, the consumption of resources is unlimited (Miller, 2001).

This matter is dealt with in depth by the economy, which indicates that human beings will always have needs that must be constantly satisfied, such as food, clothing, health, housing or education.

On the other hand, there are other needs that can only be partially covered, and do not cover the entire population of the world. In this sense, the economy is responsible for addressing the problem of scarcity.

Scarcity is defined by economics as the absence of sufficient resources to meet the needs of all people.

It is for this reason that it is essential to have strategies that dictate the way forward and why the production of goods is not enough to satisfy the needs of all individuals.

Shortage

This is a problem frequently analyzed by economics, which understands that all resources are limited. In this way, to the extent that more individuals require this resource, they will have to access a smaller proportion of it. If an individual largely accesses the good (tangible or intangible), it is likely that other individuals may not have it.

The work of the economy in this sense, takes a social tint that seeks to find alternative mechanisms and strategies that allow the satisfaction of the needs of all individuals in an equitable way within the population.

A serious problem that the economy must address is related to the people and organizations that decide who and how goods are distributed in society. Generally, institutions select and decide how resources are distributed. This involves different mechanisms that consider not only the economic motivators, but also multiple ethical variables (Online, 2017).

Efficiency

When one talks about efficiency in economics, one talks about efficiency in the production and distribution of goods. In this way, the economy tries to analyze the variables that lead to productive inefficiency and strategies to improve it, using different technological resources.

Efficiency is a fundamental problem addressed by the economy, since its improvement leads to an increase in the quality of life of society.

However, it is sometimes not advisable to eliminate all inefficiencies, as the cost of this process could greatly exceed the benefits of implementing a radical change.

The economy is in charge of seeking the welfare of societies, in this way it generates research and data that allow it to establish strategies and a way to address inefficiency (Spinosa, 2008).

The waste

One of the most common problems addressed by the economy is the waste of resources, especially those that are scarce. This topic is analyzed from what leads to waste itself and the subsequent consequences of its existence.

People choose to misuse these resources, altering the proper functioning of the market system.

When resources are widely underemployed, inefficiency increases and the productive capacity of any entity decreases. In this way, fewer goods and services are made available to the public, and fewer human needs can be satisfied.

However, economics is also responsible for analyzing what factors lead to this waste, since the nature of each problem is different depending on the social context where it is found (Study.com, 2017).

References

1. Association, TI (1974). Public Economics: An Analysis of Public Production and Consumption and Their Relations to the Private Sectors; Proceedings of a Conference Held.
2. Inc, W. (2017). Bussiness Dictionary. Retrieved from economic problem: businessdictionary.com.
3. Miller, D. (2001). Consumption and Production. In D. Miller, Consumption: Theory and issues in the study of consumption (pp. 15-19). New York and London: Routledge.
4. Online, E. (2017). Economics Online. Obtained from Principles of production: economicsonline.co.uk.
5. Pheby, J. (1998). Foreword. In J. Pheby, Methodology and Economics: A Critical Introduction.
6. Spinosa, D. (November 16, 2008). Theory and Economic Policy-ISFD109. Obtained from The Problems studied by Economics.: dspinosatpecon.blogspot.pe.
7. com. (2017). Study.com. Retrieved from Factors of Production in Economics: Definition, Importance & Examples: study.com.