What is the primary role of the three fundamental questions of economics: What to produce? How to produce? For whom to produce?

• A. They help societies allocate scarce resources efficiently.
• B. They set the prices of goods and services in a market.
• C. They determine the level of government intervention in the economy.
• D. They establish the legal framework for economic transactions.

Answer: (A)

Verified step by step guidance

1. Understand that the three fundamental questions of economics are: 'What to produce?', 'How to produce?', and 'For whom to produce?'. These questions arise because resources are scarce and choices must be made.
2. Recognize that 'What to produce?' addresses the decision about which goods and services should be produced given limited resources.
3. Know that 'How to produce?' focuses on the methods and processes used to produce goods and services efficiently, considering technology and resource availability.
4. Understand that 'For whom to produce?' deals with the distribution of the produced goods and services among different members of society.
5. Conclude that the primary role of these questions is to guide societies in allocating scarce resources efficiently to satisfy the needs and wants of people.