The Great Adversary of Any Economy

Abstract

The fundamental questions that each and every economy seeks to solve is what, how and for whom to produce, these are recognized as being critical in any economy. They are then answered in an environment of scarce resources which unfortunately, should be allocated to the unlimited human wants and needs. Hence, the need for households, firms and governments to work together in trying to answer these questions. The problem of scarce resources results in economic agents making choices, which means some alternative has to be forgone while others are preferred. Economics is, therefore, a social science concerned with combating the. fundamental economic problem of scarcity in the condition of unlimited human needs and wants of different society players. The type of economic system determines how resources are allocated to satisfy the needs . and wants. There are basically four types of economic systems, namely, the traditional economy, free market economy, command economy and mixed economy.