UNIT 5 Economics and Economy

performances
which can be consumed or enjoyed only at the instant they are produced. In 
exceptional circumstances, society may find that some of the questions 
about
what, how, and for whom to produce have already been answered; until the 
arrival of Man Friday, Robinson Crouse need not worry about the “for 
whom” question. In general, however, society must answer all three 
questions.
By emphasizing the role of society, the definition places economics 
within the social sciences, the sciences that study and explain human 
behavior. The subject matter of economics is that part of human behavior 
which relates to the production, exchange, and use of goods and services. 
The central economic problem for society is how to reconcile the conflict 
between people’s virtually limitless desires for goods and services, and the 
scarcity of resources (labor, machinery, and raw materials) with which 
these goods and services can be produced. In answering the questions 
what, how, and for whom to produce, economics explains how scarce 
resources are allocated between competing claims on their use.
Economics is about human behavior. Economists analyze problems, not 
the subject matter of economics. Economists aim to develop theories of 
human behavior and to test them against the facts.

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