Key Economic Issues – Economics is the study of human behavior in choosing and creating wealth. The core of the economic problem is the imbalance between unlimited human needs and limited means of satisfying these needs. This problem then leads to scarcity.

The word “economy” itself comes from the Greek words (oikos) which means “family, household” and (nomos), or “rules, rules, laws,” and is broadly defined as “household rules” or “household management”. .” Meanwhile, what is meant by economists or economists are people who use economic concepts and data in their work.

Main Economic Problem
Main Economic Problem

Based on the limitations on existing resources, humans must choose which goods need to be produced in order to get maximum satisfaction results. Therefore, the following 3 main economic problems arise:

  1. Production, concerns the business or activity of creating or adding to the usefulness of an object.
  2. Consumption, involves the activity of spending or reducing the usefulness of an object.
  3. Distribution, concerns the activities of distributing goods from producers to consumers.

The subject matter is further expanded by the flow of modern economics, namely:

  1. What goods and services will be produced (what),
  2. How are goods and services produced (how)
  3. For whom goods are produced and services are produced (for whom).

1. What

This problem concerns the type and quantity of goods/services that need to be produced to suit the needs of the community: what are the foodstuffs chosen? – is it clothing, housing or other services? – and how much of it was produced?

What is based on what the most pressing needs of the community are. If the community wants a certain item, then the item is produced, so that the production can be absorbed by the community. For example: at the beginning of the development of small laptops (palm top), people were less enthusiastic about the product, so the product was not well absorbed by the community. However, recently, a small laptop (with a new name netbook) has appeared again, people are very enthusiastic about this old product that has resurfaced. Its emergence is very appropriate with the wishes of today’s society who want a gadget that is all portable, light, comfortable, rich in features, internet access and of course at a much cheaper price.

2.How

After the types and quantities of production are selected, the problem to be solved is: how are these goods produced? – who produces? – what resources are used? – what technology is used?

How relates to the technique of how to save resources to produce maximum production. For example, by replacing manual production with machine production. This method can speed up production, save raw materials and so on, so that it can save production costs and can meet more needs.

3. For whom

After solving the problem of how to produce further is: for whom (for whom) goods to be produced? – who should enjoy?

For whom concerns who will use the goods produced, for example, there are special goods for children, teenagers, adults, then special goods for the upper middle class or lower middle class and so on.

To solve this problem, the community does the following:

  1. Traditions and customs carried out by primitive peoples.
  2. Instinct that is usually done by animals.
  3. Orders carried out in a society in which a dictator reigns.
  4. The price mechanism is a process that occurs in society where there is an attractive force between producers and consumers in the input and output markets.
Broadly speaking, we know four systems economy that grows and develops in accordance with the conditions and ideology of the country concerned. The four economic systems are the traditional economic system, the centralized economic system, the market economy system and the mixed economic system.

1. Traditional Economic System

System economy This is an economic system that is run jointly for the common good (democratic), in accordance with the procedures commonly followed by previous ancestors.

In this system, all goods and services needed are fulfilled by the community itself. Surely you will ask what is the government’s job in this traditional economic system?

In the traditional economic system, the government’s task is only limited to providing protection in the form of defense, and maintaining public order. In other words, economic activities, namely what and how much, how and for whom goods are produced are all regulated by the community. In general, this economic system applies to countries that are not yet developed, and are starting to be abandoned.

2. Centralized Economic System

On system economy In this case, the government acts very actively, all necessities of life including security and defense are planned by the government centrally. Implementation is carried out by the regions under one command from the center. Thus, the issue of what and how much, how and for whom goods are produced, are all regulated by the government centrally. Freedom to carry out economic activities is limited so that individual initiatives cannot develop. In general, this centralized economic system is applied to countries that adhere to communist ideology. However, because it is not in accordance with the aspirations of the people, recently it has been abandoned.

3. Market Economic System

On system economy market, economic life is expected to run freely in accordance with market mechanisms.

Anyone is free to produce goods and services, thus encouraging people to work harder and more efficiently. Thus, it is possible for producers to obtain maximum profit. If goods or services can be marketed, eventually producers will adjust to the desires and purchasing power of consumers. One of the characteristics of a market economy system is the existence of free competition. As a result, the strong are getting stronger, while the weak are getting more and more helpless. To overcome this situation, the government intervened through laws and regulations deemed necessary, so that a controlled market economy system was formed, not a free economy anymore.

4. Mixed Economic System

System economy Mixtures are generally assigned to developing countries. In this system the private sector and the government are equally recognized. This means that in addition to the private sector, there is also a state planning agency that plans the direction and development of the economy. This mixed economic system is basically a combination of a centralized economic system with a market economy system.

Reference :

  1. Soediyono R., Introduction to Microeconomics; Price and Consumer Behavior, lecture diktat series, Gunadarma Publisher, 1993
  2. Sadono sukirno, Introduction to macroeconomic theory, 3rd Edition, PT. RajaGrafindo Persada, Jakarta, 2002
  3. http://myilmu Lintas Hukum.blogspot.co.id/2015/09/science-economy.html
  4. http://myilmu Lintas Hukum.blogspot.co.id/2015/09/ Ekonomi.html

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