The basic problem of economics can also be presented as a problem of choice. Indeed, if each factor used to satisfy various needs is limited, then there is always the problem of alternative use and search for the best combination of factors of production, that is, the problem of choice. A reflection of this problem is the statement three main questions economy.

Three main questions of economics:

What? – problem of targeting. – Which of the possible goods and services should be produced in a given economic space and at a given time?

How? – production problem.– With what combination of production resources, using what technology, should the selected goods and services be produced?

For whom? – distribution problem.– Who will buy the selected goods and pay for them, benefiting from them? How should society's gross income from the production of these goods and services be distributed?

The fourth question, which also inevitably arises before every society, is the question: How? How to get rid of waste generated in the process of life, how to maintain the ecological balance in nature without reducing the level of consumption. This recycling problem.

5. Production possibilities in the economic system and the problem of choice.

The production capabilities of the economic system are limited by the scarcity of the resources used. Moreover, the limitation of all economic resources remains and even increases as society develops. This is due not only to the depletion of irreplaceable natural resources, but also to the fact that consumption constantly gives impetus to the development of production, that is, new goods and services are created, their quality characteristics change, which causes an increase in the need for consumer and investment goods. And each time society is forced to decide which of these goods to produce with available resources and on what scale.

The problem of choice in any economic system (be it a family, a company, a state) can be illustrated using economic model “Production Possibility Frontier”. And also, this model allows you to clearly demonstrate such fundamental economic concepts as limited resources, opportunity costs.

To build the model, we will plot the number of consumer goods (X) on the abscissa axis, and the number of means of production (Y) on the ordinate axis (see figure).

Means of production (Y)

Consumables (X)

O X B X C

The ABCD curve, called production possibilities frontier, characterizes the maximum possible volumes of production of means of production and consumer goods with full use of all available resources. Each point on this curve represents a certain combination of goods of these two types (for example, point B represents a combination of X B units of consumer goods and Y B units of capital goods.

The production possibilities frontier graph illustrates the fact that an economy that is fully utilizing productive resources cannot increase the production of any good without sacrificing another good. The functioning of an economy at the frontier of its production possibilities indicates its efficiency.

Based on this, the choice of the combination corresponding to point F is regarded as unsuccessful for a given society, since it does not allow it to effectively use production resources. Having chosen such a point, we would resign ourselves either to the presence of unused resources (for example, unemployment) or to the low efficiency of their use (for example, large losses, including working time). Production based on the choice of point E is generally unfeasible, since this point lies beyond the production capabilities of a given economic system.

Let's compare points B and C. By choosing point B, we will prefer to produce fewer consumer goods (X B) and more means of production (Y B) than by choosing point C (X C, Y C). More precisely, when moving from point B to point C, we will additionally receive Δ X = OX C – OX B units of consumer goods, sacrificing for this ΔY = OY B – OY C units of means of production. The amount of one good that must be sacrificed to increase the production of another good by one unit is called opportunity costs or costs of lost opportunities.

The ABCD curve is convex. This is due to the fact that one resource can be used more productively in the production of consumer goods, while others can be used as means of production.

If new technology, new technological processes are introduced simultaneously and evenly in all industries, then the production possibilities frontier AD will shift to the position of the dotted line A 1 D 1, the possibilities of producing both means of production and consumer goods with the same resources will increase approximately equally ( see fig.).

If innovations are carried out primarily in industries producing capital goods, the increase in the area of ​​production possibilities will be skewed to the right (see figure).

When solving the problem of choice in a world of limited resources, economic entities must always solve three main, fundamental questions of the economic organization of production:

1. in produce- what goods should be produced, in what quantity. In fact, this means allocating resources, determining the structure of the economy, and choosing priorities for economic development.

2. in How to produce- with the help of what resources and what technologies economic benefits will be produced.

3. For whom to produce- whoever becomes a consumer of the goods produced will be provided with sales and thereby reimbursement of the resources spent on production.

These basic issues of organizing production constantly face both each individual manufacturer (firm) and the economy as a whole. They are continuously reproduced at both the micro and macro levels.

The named fundamental issues of economics are common (universal) for all economic systems, but in each of them they are solved differently. Each system has its own specific mechanism for coordinating and managing the economic activities of business entities.

How does the process of coordination occur in different economic systems?

Types of economic systems

Economic systems are a set of interconnected economic elements that form a certain integrity, the economic structure of society; the unity of relations arising regarding the production, distribution, exchange and consumption of economic goods.

Economic systems differ in the way they address the main issues: what to produce? how to produce? for whom to produce?, and also according to the principle of who bears transaction costs. Historically, the following economic systems can be distinguished in their “pure” form: traditional, market, command. But in the modern world there is mixed economic system, which combines the features of traditional, market, team.

Traditional economics

Methods and techniques of production, exchange, and income distribution are based here on time-honored customs and traditions. Heredity and castes dictate the economic roles of individuals, and socioeconomic stagnation is clearly visible. Technical progress and the introduction of innovations are sharply limited, because they contradict traditions and threaten the stability of the social order. Economic activities are secondary to religious and cultural values.

Market economy(market economy) is characterized as a system based on private property, freedom of choice and competition, it is based on personal interests, and limits the role of government.

In the process of historical development of human society, prerequisites are created for strengthening economic freedom - the ability of an individual to realize his interests and abilities through active activity in the production, distribution, exchange and consumption of economic goods.

Objective and subjective prerequisites for this arise after the elimination of all forms of personal dependence. The development of a market economy played an important role in this. A market economy guarantees, first of all, consumer freedom, which is expressed in freedom of consumer choice in the market for goods and services. Voluntary, non-coercive exchange becomes a necessary condition for consumer sovereignty. Everyone independently distributes their resources in accordance with their interests and, if desired, can independently organize the process of production of goods and services on a scale that allows their abilities and available capital. This means that there is freedom of enterprise. The individual himself determines what, how and for whom to produce, where, how, to whom, how much and at what price to sell the produced products, how and on what to spend the income received. Therefore, economic freedom presupposes and is based on economic responsibility.

Personal interest is the main motive and the main driving force of the economy. For consumers this interest is maximizing utility, for producers it is maximizing profit. Freedom of choice becomes the basis of competition.

The basis of a market economy is private own. It is a guarantee of compliance with voluntarily signed contracts and non-interference by third parties. V Economic freedom- the foundation and integral part of the freedoms of civil society. It acts primarily as a necessary means of achieving political freedom; in turn, political freedom is a guarantor of economic freedom.

Classic market economics is based on the limited role of government intervention in the economy. The government is necessary only as a body that determines the rules of the market game and monitors the implementation of these rules.

As opposed to market command economy(command economy) is described as a system dominated by public (state) ownership of the means of production, collective economic decision-making, and centralized management of the economy through state planning.

A characteristic feature of a command economy is the monopoly of production, which ultimately slows down scientific and technological progress. State regulation of prices, monopolism of production, and inhibition of technical progress naturally give rise to an economy of scarcity. The paradox is that the deficit occurs in conditions of general employment and almost full production capacity. Hypercentralism naturally contributes to the swelling of the bureaucratic apparatus. The basis of its growth was the monopolization of the role of the state in the hierarchical division of labor. The administrative-command system is a unique, ideologized form of bureaucracy. It is characterized by the merging of legislative and executive, military and civil, administrative and judicial powers, and the merging of the party and state apparatus.

Mixed economy(mixed economy). A mixed economy means a type of society that synthesizes elements of the first two systems, that is, the market mechanism is complemented by the active activities of the state.

The government plays an active role in the economy, promoting its economic stability and growth, providing it with some goods and services that are insufficiently produced or not produced at all by the market system, distributing resources and income.

Transition economy as a system. The transition from one economic system to another gives rise to a special, transitional state of the economy. This state of the economy can exist in one or several countries and even on a global scale. The transition from one economic system to another has never been an instantaneous leap. This is a very long process, which in the past was measured in centuries, and more recently in decades. For example, the transition from a traditional system to a market economy of free competition took place in Western Europe at the end of the 18th - first half of the 19th century. In Ukraine, such a transitional state of the economy was typical for the period 1861 - 1913.

At the end of the 20th century, a massive transition of several dozen countries from an administrative-command to a market economy began. Therefore, at this stage, we consider the economy to be transitional, where relations based on administrative-command principles will be replaced by market mechanisms.

A transition economy has some specific features. The starting point is the crisis and subsequent transformation of economic relations of the previous system, as well as the emergence of new relations inherent in the system that is being born. Old and new relationships interact within the transition system.

In a transitional system, special transitional economic forms arise and function, which indicate the direction of movement towards a new system. These include privatized enterprises in modern Ukraine, which embody the transition from state ownership to private ownership.

A transition economy is also characterized by the intensive development of new forms in parallel with the decline and gradual disappearance of old economic relations. Thus, the rapid expansion of the private sector during the transition from an administrative-command to a market economy was accompanied by the transformation of state-owned enterprises into firms operating according to the rules of a market economy.

Transition processes in eastern and western countries occur differently. Firstly, the decisive role of the state in the economy remains, with the relatively weak positions of private owners and strong equalizing tendencies. Secondly, with the weakening of the regulatory functions of the state, private enterprise initiative prevails, while at the same time social stratification sharply increases. Ukraine is located at the junction of Western and Eastern types of civilization, which largely determines the nature of the market economy being formed in it.

At first, the prevailing view was that the transition from an administrative command economy to a market economy would take years. But now it becomes clear that this process will last for decades. Therefore, it is necessary to pay attention to the patterns and specifics of the transition economy.

The need for a transition from an administrative-command economy to a market economy is due to the growing incapacity of the non-commodity economy as extensive factors of economic growth are exhausted. The administrative-command system has two significant drawbacks. The first is its inflexibility, slow adaptation to change. The second drawback is extremely low productivity due to the total suppression of economic initiative.

It is not known who first formulated the main questions of economics, but it is definitely clear that they have faced humanity from the very first manufactured tools...

From Masterweb

It is not known who first formulated the main questions of economics, but it is definitely clear that they faced humanity from the very first manufactured tool. What to make (an ax or a hoe), how to make it (using only wood or using wood and stone), who will get it in the end (the strongest or the most dexterous). These three main questions of economics were born with humanity. And the correct answers to these questions still determine the path of development of the world economy.

Trio in economics

The choice of acceptable solutions is the basis of any management decision. And the correct formulation of the questions facing society is no less important incentive for development than the answers to them.

Modern social science has defined the main issues of economics as follows:

• what to produce and in what quantity: in most cases, you do not have to make a choice from extreme decisions - guns or oil, but any manufacturer faces the question of what product to choose for production and how much to produce in order to satisfy demand as much as possible, but not allow overproduction;
• how to do it: a complex question of choosing technology, method of organization, taking into account available resources and other factors;
• how to distribute, for whom to produce: not everything is still bought for money; some of the benefits are not redistributed in a market way in favor of the least protected segments of the population.

Basically, market mechanisms are used to solve these issues, but with the development of technology and increased labor productivity, elements of planning are increasingly used.

What to do?

Making a decision on the production of a particular type of product, even at the level of a small company, is complex and responsible. The company must correctly allocate available resources and determine possible production volumes based on the forecast of demand for its products. The task at the country level becomes many times more difficult, given the same resource constraints. It is necessary to produce thousands of products to support the functioning of society. At the same time, the production of some types of products can often be achieved only by reducing others.

Countries sometimes solved this one of the main economic questions (what to produce) radically. The Soviet Union in the 30s and South Korea in the 60s, the first under a planned economy, and the second under a market economy, industrialized their countries. Most resources were concentrated in heavy industry to the detriment of other industries and the living standards of the population. Despite the fact that the countries belonged to different forms of economic management, they solved how to solve the main economic issues mainly by reducing the consumption of their population.

How much do you need to produce?

In an ideal competitive market, output is governed by supply and demand. The conditional consumer has the opportunity to buy goods or services on the basis of free choice without administrative pressure. With a sufficiently large number of such consumers, the product is sold out quickly enough. Sellers (and ultimately the manufacturer) receive a signal that demand is increasing. And with the resources obtained through sales, production is increased. Thus, in a market economy the question of how much to produce is decided. Sometimes, however, the signals are distorted or arrive late, then overproduction occurs.

How to produce

The choice (how to produce) is narrowed when determining the type of product and volume of production. The production of the same liquefied natural gas still depends only on the accepted production volume, as does the production of large-scale chemical products (for example, mineral fertilizers). But still, in most cases, there is a choice of technology and production method, including the degree of automation. More developed countries often gain a competitive advantage by using more modern technology, which allows them to produce more advanced products at lower costs. At the same time, companies from less developed countries can profitably use “old” technologies if there is no need to compete with global corporations. Therefore, the choice (how to produce) is not obvious in this case either.

How to distribute

The main question of a market economy is: for whom to produce, that is, who will be the final consumer of the product. Most of the world's products are distributed through the market. Who gets this or that product is determined by free choice and the ability of the consumer to pay the required price; the choice ultimately depends on income. Demand determines what and how much to produce, because limited resources make it too expensive to overproduce any good. Not all issues of product distribution can be solved by market methods. Therefore, countries, especially developed ones, use direct distribution of benefits to solve social issues.

Is it possible to optimize production

Until recently, a number of countries with planned economies tried to find a centralized solution to the main issues of the economy, while the main question was considered to be: “What to do?” We tried to calculate what and how much needed to be produced. Therefore, plants and factories were busy, but did not always produce what was in demand. As a result, all countries of the world returned to determining the need for products, focusing on supply and demand.

Making a decision on the production of a particular type of product at the level of a large company, and even more so a global corporation, is complex, multi-stage in nature with elements of planning. Manufacturers are guided by the results of market research, analysis of production and promotion costs, forecasting, and often the possibility of generating demand. And based on the results of comprehensive research, a decision on production is made.

More and more technologies

The level of development of countries is so different that even in the same country production methods from different centuries can coexist. From the most modern digital technologies to “old-fashioned” manual production methods. For example, in India, one of the most advanced countries in the world in the field of software development, where science cities of information technology coexist with clans of laundresses and garbage collectors who (like a hundred years ago) do everything by hand. Therefore, it is not always obvious that market demand stimulates the use of new technologies.

Naturally, in each specific case, a production technology will be selected that will allow the product to be produced at minimal cost and taking into account local traditions and production methods. Hundreds of scientific and technical consultants work in every industry to help determine production methods and their efficiency. More and more specialists will be involved in solving the second of the main issues of the economy; this is one of the fastest growing and most popular types of activity.

How products are distributed

The times when it was thought that the almighty hand of the free market could solve all distribution issues are gone forever. The scheme, where demand determined where the resources for production would go, and then the produced product was received only by those who were able to pay for it, is now working in the poorest countries of the world. In most countries of the world, consumption, along with market mechanisms, is also regulated by public demand. And the richest countries already have the opportunity to guarantee an unconditional income to their citizens, sufficient to meet basic needs. Many economists expect that the fourth industrial revolution will increase productivity and reduce costs so much that it will make it possible to satisfy the basic needs of the individual free of charge. Optimizing production will remove resource restrictions on meeting needs. What will be the main economic issues then? Time will tell.

Kievyan Street, 16 0016 Armenia, Yerevan +374 11 233 255

Hello friends!

Surely you have ever had a feeling of complete misunderstanding and difficulty after reading some article on economics or even a book? I’m sure it was, and more than once.

Economy, we hear this word all the time. The economy is all around us. On television, radio, newspapers and the Internet. We hear words such as stocks, bills, price indices, inflation, unemployment, budget, etc.

The question is, what do we understand from this? What is important about this? What will inflation, for example, and changes in stock prices lead to? I am sure that many people get confused with some indicators in thousands of economic reports. Not to mention thousands of books and articles on economics.

How can we be here? How to navigate all this? And how do we generally understand this science of economics? What is it about?

Friends, remember when a person tries to tell you something important and doesn’t know where to start. Remember!? What do we usually say at this moment? Yes, that's right! We tell a person to start with the main thing. That is, from the point! No matter how much a person beats around the bush during a conversation, until he says the main thing, in fact, we still don’t understand anything.

Conclusion. Everything in this world has an essence. Economics is no exception. Knowing the essence and understanding it, we can understand any occurring phenomenon.

Let's get started!

Economics is a huge science with its thousands of definitions. But from these thousands of definitions, we will choose with you only... three main definitions. More precisely, not even definitions in their pure form, but THREE MAIN QUESTIONS. Yes, yes friends, just three questions! And we will begin to understand many of the processes occurring in the economy. We will stand with our feet on these three issues and everything else will remain at the top: stocks, commodities, inflation, trade, firms, corporations. Those. You and I will stand on those very “three pillars”, but unlike the earlier description of the structure of the Earth and planets, our “pillars” are absolutely real and it is on them that everything rests and is repelled from them.

I sense your confusion. How can you understand the essence of economics with questions? You're right, you can't ask questions. After all, a question is just a question and it does not give any idea. But! Dear friends, where there is a question, there must be an answer. And we have the answers. The correct question contains 50% of the answer. Our three questions could not be more correct.

So, drum roll... And they go on stage three main questions of economics:

1. What to produce?
2. How to produce?
3. For whom to produce?

Whatever one may say in economics, everything revolves around consumption and production.

There is a directly proportional relationship here. Consumption is growing, production is growing, production is growing, the welfare of people is growing, the welfare of people is growing, the welfare of the country is growing. And vice versa. All! That's prosperity. That's the whole mechanism. No need for economics! No textbooks, no theories are needed. It is enough to understand this mechanism to understand what is happening in the economy at a basic level.

Now let's get back to our questions. If you can answer these questions, you can safely go teach economics. I'm not kidding!

The whole economic essence is based on these three questions. The entire economy, all economic activity is aimed at solving these issues. I'll say more. All human activity in the economy is determined by these questions.

All entrepreneurs, all firms, all corporations, all states, all factories, everyone, everything and everyone are trying to give answers to these questions, but they answer not with words, but in the form of products or services that they produce.

You get it, friends! The reason for all economic processes, all economic phenomena are these three questions. These questions are the REASON! Everything else is a consequence.

The very least remains. Consider these three questions. So that our understanding of the economic essence is complete and clear.

First question.
What to produce. Since all people, firms, corporations, states consume a huge amount of different goods and services, there is a desire among other firms, corporations, states and people to satisfy this demand. But! Demand is such a thing. You need to guess it, or rather know it better. Yes, we all want to consume more goods and services. And our appetites are growing. But this does not mean at all that we are ready to consume everything that is offered! No! We want to consume what we need - one, what we like - two, and what interests us - three. But everyone’s needs, preferences and interests are different, wouldn’t you agree!?

So what should we do? But how to deal with this is the problem of those who are trying to satisfy our needs, interests, preferences. These are the same people who are engaged in business: the production of goods and services. Here we are talking about manufacturers. It’s their job to think how to please us. If they are satisfied, it means that the demand for their products will grow and remain large, which means that they will earn good money and have the opportunity to develop and grow. If not satisfied, then bankruptcy or search for new goods and services for production.

Well, how can you not agree that the client is always right!? Right! Everything is about him, for him and about him! The client is the head of everything, you know.

Corporations such as Apple, Microsoft, Yandex, Sony, Dell, Samsung are the result of the fact that they accurately guessed the preferences of consumers and were able to satisfy their interests, needs, and preferences. The result is how you see the growth of company profits, capital growth and brand development.

Some companies look at this and think that it is not difficult to satisfy consumer demand. That you need capital and an idea and things will work. Alas no! It is not enough to have an idea and capital. You need to somehow mystically feel and know that your product or service is needed by people and is interesting. To do this, you need to analyze people's preferences, interests and needs. Correctly drawn conclusions will lead to the growth of the company, which means an increase in profits and well-being for you.

This is what all producers of goods and services think what to produce. At the same time, looking into our eyes in search of what we want. How they know what we want will be discussed in the next article of the economic column. Don't miss it.

Second question.
How to produce. This question follows strictly from the first. Once firms have determined what to produce the question arises, how to produce. This is a very delicate question. How to produce means what technologies to choose for production, what resources to use, where to produce (i.e. in which country, in which region), i.e. The task is how to most effectively use available resources to produce a product or service.

Why is this so? Yes, because in addition to the fact that the needs and interests of consumers are a signal for the production of goods and services, price is also a factor that influences the production of goods and services.

The higher the price, more entrepreneurs want to produce a given product or service, and therefore it is necessary to redistribute available resources. And even refuse to produce existing goods and services. In favor of expensive, and therefore more profitable.

Let's take a resource like labor or labor, as it is sometimes called.

For example, China or India are known to have an abundance of labor, hence the cheap labor, but at the same time in China and India there is a lack of capital, hence the high cost of capital (loans at higher rates). In the USA, everything is just the opposite: labor is expensive (high salaries), but capital is relatively cheap (interest rates on loans are lower, since the banking system is developed).

Entrepreneurs always strive to reduce their costs in order to obtain greater profits at lower costs, which at the same time gives them the opportunity to set a lower competitive price for their goods. After all, the cost of goods has become less.

This is why many companies today (Apple, Samsung, Dell, etc.) manufacture their products in China and India. Cheap labor is what attracts companies.

Conclusion. How to produce largely depends on the price of the product or service produced. If the price is higher, then high-quality and expensive resources are used, believing that everything will pay off due to the higher price of the product on the market.

And important. The choice of how to produce means how much money will be spent on the production of a particular product or service. And the quality of the products will depend on the choice of resources and technologies. And who will be the consumer of the product will depend on the quality. And it all comes down to price, as mentioned above. The high price allows the use of high-quality and expensive resources. What affects the product itself? Any way you look at the chain. Everything is tied up. This is the economy, friends!

Third question .
For whom to produce. This question would be better if it came first. Those. first. But our article is not about business and business modeling, but about economics. Therefore, we pose this question as the third one based on economic feasibility. We must understand that this issue comes first in the activities of businessmen.

The answer to this question can be formulated in different ways. But our task is to get to the bottom of it. Therefore, the answer will be simple and clear.

For whom to produce? How do you think? If you have read my previous posts in the economic column, especially the articles “Demand” and “Supply,” then you easily answered this question.

You're right! It is necessary to produce for those who have MONEY. That's all. That's the simple answer. Here you must understand that this simplicity is the big essence. If consumers have no money or very little of it, then no one will produce anything. Those. it is necessary to produce for those who have money, and those who, having purchased a product or service (i.e., benefit), will receive satisfaction.

Another question is how much money the manufacturer is counting on. There are products for people with high incomes, for average incomes, and the well-known “budget” option.

For example, the smartphone market. It is already clear that Apple smartphones are expensive. But Sony smartphones vary in several price segments: budget class, middle class and prestige class. The price depends on the class.

That's all, friends! We have revealed three main economic issues. They are the essence of economics. They are the entire economy. Whatever happens in the economy, everything happens from and to resolve these issues.

It can be said without exaggeration that the search for answers to these questions is economics.

One thing remains unclear. More precisely, the question is: what mechanism is used to bring all these three issues into harmonious existence? How do companies know what to produce if they don't survey people? How do they know what price to offer if they don't have direct contact with us and we don't fill out any forms?

We will discuss this issue in the next article of the economic column on the site. This is magic... Just kidding, friends, it's not magic - it's the market. But, as we agreed, we will talk about this next time!

Jalalov Remzi, especially for the Golden MSN Club ® Millionaires Club

How do costs and profits compare?

Remember: What is profitable to produce and for whom? Who can be called a rational producer? Where are the limits of economic freedom?

Should production be regulated? The limited economic resources on the planet give rise to the need for humans to solve the problem of their rational use and distribution. From the previous paragraph, you learned that everyone who makes economic decisions constantly has to make economic choices: households, firms, the state. Any society, regardless of the level of wealth, must be able to determine what goods, how and for whom to produce. These three questions of economic organization are decisive for. development of society. Let's take a closer look at them.

What to produce? Which of the possible goods and services must be produced at this time? An individual can provide himself with necessary goods in various ways: produce them himself, exchange them for other goods, receive them as a gift. Society as a whole cannot increase production all goods and services at the same time. He has to make a rather difficult choice: what he would like to receive immediately, what he can wait to get, or refuse something altogether. Firms and individual entrepreneurs constantly make decisions about what goods and services should be produced using the resources available at their disposal and offered to the consumer.

So, the essence of the problem is that resources are limited and the economy cannot provide unlimited production of goods and services. Therefore, decisions must be made about which goods and services should be produced and which should be abandoned. (Give examples of such decisions by economic participants.)

How to produce? The solution to this issue is related to the choice of economic resources, technology, location of the enterprise, organization of production, etc.

There are various options for producing goods. From the many options, it is important to choose the most effective one. So, there are always several ways to build roads, make cars, and develop new mineral deposits. One method requires large financial costs, another - technical, the third - significant use of labor resources, etc. Which option for combining the resources necessary for production is optimal? When resolving this issue, the economic efficiency of the project is taken into account first of all.

Economic efficiency means obtaining a given volume of output with the least expenditure of limited resources. More products produced from a given amount of input means more efficiency, and vice versa. From the 7th grade social studies course, you know the connections between the amount of production resources and the quantity and quality of the product produced. Let us recall that the manufacturer, solving the input-output problem, strives to find the best ways to combine resources and organize its production. Thus, the following methods help the manufacturer to effectively use resources and reduce costs: the introduction of technical innovations and new technologies, the economical and careful use of resources, improving worker skills, and the use of division of labor.

Thus, society as a whole and individual producers must decide: by whom, from what resources and with the help of what technology should goods be produced, how should production be organized?

For whom is the product produced? Who will be able to purchase goods and services and how are they distributed among members of society?

Since no society is able to provide everyone with, for example, their own cottage or car, they have to put up with the fact that someone lives in an apartment building or uses public transport. Society is forced to orient producers towards a specific consumer of economic goods. Manufacturer takes into account the needs for goods and services of various population groups with different incomes and decides for whom to produce: for the rich (luxury goods), for the mass consumer or for the poor (cheap goods).

A watch manufacturer can produce wristwatches in a simple metal case or in gold, ordinary mechanical alarm clocks or complex electronic ones. His choice will depend, in particular, on deciding who will use the products produced. Thus, through choice, the problem of distribution of economic benefits is solved.

All of these basic economic issues are based on choice and are decided by economic participants in close interrelation.

Economic system and its functions. We have already touched on the question of how people make choices when resources are limited. In order for the economy of any country to work normally, it is necessary to find a way to coordinate these choices of millions of people.

The variety of ways to coordinate economic life and make decisions on major economic issues depends on the dominant form of ownership in society (who has access to economic resources), methods of making economic decisions on the organization of production and distribution of goods (spontaneously with the help of orders, commands), as well as methods people's notes on economic activities (incentives and motives for participating in activities).

In the most general terms, we should name three ways for society to solve the main economic issues: according to long-established customs (tradition); by issuing instructions and orders “from top to bottom” (by command methods); using the market. Let's look at them in more detail below.

The development of society has shown the possibility of the existence of several options for organizing economic life. They are called economic systems.

An economic system is a set of organizational methods for coordinating the economic activities of people to solve the questions: what, how and for whom to produce?

Economists distinguish the following main types of economic systems: traditional, centralized (command), market. Each of them is looking for its own approaches to solving major economic issues and ways to distribute limited resources. However, such a distinction between economic systems is quite superficial. In real life, it is difficult to find a state with a purely defined type of economic system. Economic systems operating in the world use various combinations of the above methods of organizing economic life.

Types of economic systems. The economic activities of people carried out in a particular economic system have their own characteristics. Let's consider them using the example of the main types of economy.

Traditional economics- an economic system in which customs and traditions determine the practice of using limited resources. It is based on the widespread use of manual labor, backward technology, communal farming, natural exchange. Basic economic issues are resolved in accordance with customs and traditions (do everything as before).

Inhabitants of the African jungle or the islands of the southern moraines, Canadian Eskimos conduct economic affairs based on age-old traditions passed down from generation to generation. Economic resources in a traditional economy are most often collectively owned by a tribe or community. Decisions about the use of community resources are made collectively.

The range of economic goods produced is not diverse. The same is typical for certain types of activity (mainly work in agriculture, crafts). Technologies and production methods in the traditional economy have not changed for centuries, which hinders the development of the economy and the growth of production efficiency. Such an economic system, despite its stable, predictable nature, is capable of satisfying only the minimal, vital needs of people.

Currently, the traditional economic system has been preserved in its pure form among some tribes of Central Africa, South and Southeast Asia. Some elements of such an economy can be found in a number of underdeveloped and developing countries. For example, some states in India maintain semi-subsistence farming.

(Think about whether in modern Russian society there are any aspects of economic life regulated by traditions and customs.)

Market economy- a way of organizing economic life based on a variety of forms of ownership, entrepreneurship and competition, and free pricing. In this economic system, deciding what to produce, how and for whom is the result of the interaction of sellers and buyers in the market. In an economic sense, a market is a set of economic relations manifested in the sphere of exchange, as well as the conditions thanks to which sellers and buyers find each other and can make transactions.

In a market economy, the main resources of production and its results are in the hands of private individuals. People operating in this economy are free from the power of customs and orders “from above.” Everyone independently makes economic decisions in accordance with their own interests and needs. The consumer makes a purchase decision based on the desire to receive greater benefits from consuming the product. A manufacturer, deciding to produce a particular product, expects to make a profit. Therefore, the question “what to produce?” in a market economy there is one answer: only those goods that can bring profit will be produced, and those goods whose production entails losses will not be produced. At the same time, the manufacturer strives to choose a production technology that will provide him with the greatest profit. In a market economy, production is carried out only by those firms that are willing and able to apply new production technology. The use of new technologies ensures increased economic efficiency as a result of reduced production costs. Thus, the market economic system favors technological progress.

If each participant in the economy acts in his own interests, then how is the problem of fair distribution of goods solved? The purchase by consumers of a manufactured product depends on the amount of their monetary income and prices for goods and services. The higher the consumer's income, the more of the product he will be able to purchase. The lower the price of a product, the more quantity it is consumed, and vice versa. It is the prices, freely formed in the process of purchase and sale, that provide the answer to the questions: what, how and for whom to produce? You will learn in detail about how the market operates and how prices contribute to the efficient distribution and use of economic resources in subsequent lessons.

Opinions. Economists have serious debates about the effectiveness of a market economy: on the one hand, it promotes the rational distribution of resources and personal freedom, but on the other, it is not efficient enough. The so-called “market failures” include unemployment and excessive inequality in income. economic instability, etc.

Command economy an economic system in which the main economic decisions are made by the state, which acts as the organizer of the economic activities of society. It is characterized by state ownership of the means of production, centralized planning of production, distribution and consumption of material goods.

All economic and natural resources are owned by the state. Therefore, what, how and for whom to produce, the state plans from a single center on the basis of orders (directives), laws, and planned targets. The state controls and regulates the production and distribution of basic goods. Such an economic system existed in the USSR and other socialist countries. The unified economic center tried to take into account all needs - from social to individual, to provide for all emerging problems associated with their satisfaction (Think, is it possible to draw up an ideal plan for the development of the economy of the entire country. What could interfere with this?)

The result of such planning was often a shortage of some goods (your parents still remember the numerous queues) or an excess of others, delays due to complex administrative procedures in the introduction of new technologies into production and new equipment into the everyday life of the population.

Producers, removed from independent economic decisions, turned into executors of other people's orders. They were not interested in the results of their activities, since a significant part of the income was transferred to the state. This caused a decrease in labor productivity and, in general, the efficiency of social production. As a consequence, there is a low level of satisfaction of people's needs for goods and services. This is one of the reasons for the collapse of the command economy in our country and the narrowing of the number of countries in the world that maintain this type of economy. Currently, command economies operate in Cuba, North Korea, and some countries in Southeast and Central Asia.

The modern economy of most countries is mixed. It is based on the market, but at the same time various forms of government regulation are used, private property and state property interact. A mixed economy is a modern economy in which both the market and the state play an active role.

Document. Russian scientist-economist, doctor of economic science E. N. Lobacheva characterizes the type of economy under consideration as follows:

“In modern conditions, the most common economic system should obviously be recognized as a mixed economy. It is characterized by: a developed market, economic freedom, and therefore diverse entrepreneurial activities of wide sections of the working population and an active regulatory role of the state... This makes it possible to realize the possibilities of a market economy to increase production efficiency, and through state regulation to orient the country towards the rational and more complete use of limited resources , application of safe technologies and preservation of the environment. A fairly long period of functioning of reasonable models of a mixed economy shows that a state-regulated market economy is capable of ensuring the economic, scientific and technical development of the country and providing fairly high social guarantees to its citizens.”

The balance between the economic roles of the state and the market in managing the economy varies significantly in modern developed countries. Thus, in the USA, about 4/5 of the total volume of products produced in the country is provided by the market system. Japan's economy is characterized by government planning and coordination of economic activities between the government and the private sector.

So, the economic system contributes to solving the problem of efficient use of limited resources. The main task of the economic system is to bring into line the unlimited needs and limited capabilities of members of society by solving the questions: what, how and for whom to produce?

Test yourself

1. How to resolve the contradiction between limited resources and growing needs of people?

2. What is economic efficiency?

3. What are the differences in the ways economic choices are coordinated in different economic systems?

4. What are the features of the functioning of the main economic systems?

In the classroom and at home

1. Read the text below with missing words.

In a market economy, production resources and its result - the product - belong not to the community, as in -, and not to the state, as in -, but to private

persons. Therefore, the problem of incentives for production in a market economy does not arise. Each manufacturer chooses the most profitable product for itself and produces it in order to get the result - . He also chooses, if possible, the most efficient one - production, in which the ratio of results to costs is the greatest. The market economy is based on entrepreneurship and private -. Historical experience has shown the advantage of a market economy over others -.

Select from the list below what needs to be inserted and write it down in your notebook (Words are given in the nominative case; there are more words in the list than you need to select): 1) command economy; 2) traditional economy; structure; 4) profit; 5) trade; 6) technology; 7) revenue; 8) economic system.

2. Using knowledge of the history of Russia, determine the signs of which economic systems characterize the economy of the era of Peter I. Give the necessary examples.

3. Fill out the table in your notebook.

Enter the listed characteristics of a particular economic system in the appropriate column of the table: dominance of natural economy; economic independence of producers; control over the distribution of benefits by the state; predominance of state ownership; “simple labor” as the basis of the economy; equal rights for all forms of ownership: adoption of state plans, mandatory or productive; production of products primarily for own consumption; government support for a stable price level; closed economy; centralized redistribution of economic resources; customary use of productive resources.