How do economies and social institutions address the fundamental economic problem?

The choice that emphasizes addressing the fundamental economic problem through the three economic questions is rooted in the core tenets of economics. The fundamental economic problem revolves around scarcity, which occurs because human wants are unlimited while resources are limited. To effectively allocate these scarce resources, economies must answer three critical questions:

1. What to produce?
2. How to produce?
3. For whom to produce?

By engaging with these questions, economies can determine the most efficient use of resources, establish production methods, and decide how goods and services will be distributed among individuals and society. This structured approach allows economies and social institutions to manage resources effectively, aiming to fulfill the needs and wants of society while acknowledging the limitations imposed by scarcity.

While other options touch on aspects of economic behavior, such as resource creation or addressing demand, they do not directly encapsulate the comprehensive framework that guides decisions in economics as the three economic questions do. This framework is essential for understanding the prioritization and trade-offs that occur in economic systems.