What, how, for whom to produce

An economy is where people and firms produce, exchange and consume goods and services. Every economy has to decide what to produce, how to produce them and who to produce them for. This is called resource allocation.

What to produce?

This involves choosing which wants to satisfy based on consumers interests and fashion trends. 

How to produce?

Once we know what to produce we need to think about how to make these goods. What tools are needed? How much land is needed? Do we have enough workers to manage the workflow?

For whom to produce?

We have answered two questions already but we still need to answer the final one. It must be decided who gets the goods and services that have been made. This question must be answered by society as a whole because the answer depends on people's opinions.