What is the basic economic problem?

In economics the main problem we deal with is the fact that there is a finite number of resources on the planet. In other words we don't have an unlimited amount of things. e.g. we will eventually run out of oil and gas.

What are the implications of this? 3 questions come to mind:

1. What to produce with only limited resources?

So for example how much food should be produced? 

2. How to produce?

What factors of production should be used. Should labour be used or machines. How much should be used. 

3. Who should we produce for? 

How doe we distribute these goods that we have made. Should we give goods and services to those who can pay more? or should we use a different allocative system?

The study of economics tries to grapple with these questions through the use of models. These models help us simplify the real world in order to be able to make judgements and predictions; hopefully allowing us to answer some of these questions.

Thomas K. IB Economics tutor, A Level Economics tutor, GCSE Economics...

7 months ago

Answered by Thomas, who has applied to tutor A Level Economics with MyTutor

Still stuck? Get one-to-one help from a personally interviewed subject specialist


Shona S. A Level Economics tutor, A Level Biology tutor, GCSE Biology...
View profile
£20 /hr

Shona S.

Degree: Economics (Bachelors) - Birmingham University

Subjects offered: Economics, Maths+ 1 more


“I am a second year Economics student, studying at University of Birmingham. At school I studied Economics, Maths and Biology for A levels and having enjoyed learning them, so I feel I will be able to enthusiastically teach these subje...”

Jay L. A Level Art tutor, GCSE Art tutor, A Level Chemistry tutor, GC...
View profile
£20 /hr

Jay L.

Degree: Mathematics, Operational Research, Statistics and Economics (MORSE) (Bachelors) - Warwick University

Subjects offered: Economics, Maths+ 4 more

Further Mathematics
-Personal Statements-

“Hi! I am currently a fresher at the University of Warwick, studying Maths, Operational Research, Statistics and Economics, or MORSE. I have always enjoyed the challenge of maths and would really like to help you experience joy and sa...”

Joel G. GCSE Maths tutor, A Level Maths tutor, GCSE Economics tutor, ...
View profile
£20 /hr

Joel G.

Degree: Economics with a year in industry (Bachelors) - Liverpool University

Subjects offered: Economics, Maths+ 1 more


“I am an economics student at the University of Liverpool. I am really interested in economics and mathematics and I would love to share this intererest with yourselves. I I have taught children from year 7 to year 11 how to debate thr...”

About the author

Thomas K. IB Economics tutor, A Level Economics tutor, GCSE Economics...
View profile
£20 /hr

Thomas K.

Degree: Philosophy, Politics, Economics (Bachelors) - Oxford, St Anne's College University

Subjects offered: Economics, Maths+ 3 more

Government and Politics
.TSA. Oxford.

“About me:I am from London and currently in my first year at Oxford studying Philosophy, Politics and Economics. I have always been fascinated in current affairs which lead to me becoming interested in the social sciences as an academ...”

MyTutor guarantee

You may also like...

Posts by Thomas

What is the basic economic problem?

What's the difference between the mean, median and mode?

Other A Level Economics questions

What is the difference between external and internal economies of scale?

Explain why monopolies may be an undesirable form of market structure

Explain the main sources of monopoly power.

Explain how a company would set a price if their aim was to profit maximise.

View A Level Economics tutors


We use cookies to improve our service. By continuing to use this website, we'll assume that you're OK with this. Dismiss