The Economic Problem - Foundations of Free Market System

Essay by reeatchUniversity, Bachelor'sA+, November 2004

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Human beings are created to strive and survive in cases of scarce resources; however, is society ready to stand by itself in the case of extreme emergencies where resources are few to be distributed among all the population? This question and others will be covered on this paper. This paper will cover briefly the economic problem and its solution focus in the daily events or activities these days, and in a highly urbanized world.

What is the economic problem? The economic problem emerges because the desire for goods and services to consume is greater than the ability to produce those goods and services. The demand for goods and services arises from human wants (Richard Young, 1996, p. 1). As it is known the population of United States is growing in a fast pace; however the need to struggle for existence is increasing at faster pace due to lack of natural resources.

The United States is a rich nation that has survived, because if its citizens do not execute their tasks, somebody else will do it. Meaning, if the country cannot produce the goods, it will buy from somewhere else. The United States, as an economic society must "organize a system to assure the production of enough goods and services for its own survival", and make plans for the distribution of such goods, so that "more production can take place" (Robert L. Heilbronet, Milber S. William, 2002, p. 1-4, chap. 1).

Three economic solutions to the economic problem have been created through time. The first one is tradition, which solves the problems of production and distribution by enforcing a continuity of status and rewards through social institutions such as the kinship system. One still remembers, in the old days when children used to learn what his father did in the farm...