What is the basic economic problem?

The basic economic problem deals with the problem of resource scarcity in economics.  There are two main components to the problem.
  1. Consumers have infinite wants and needs.
  2. Resources are finite.
So the problem is how do economies use the scarce resources to fulfil the unlimited wants and needs? This must be answered by the economic system. Whether an economy has a free market, command or mixed system, these three fundamental questions will arise.
  1. For whom should the system produce goods and services?
  2. What goods and services should the system produce?
  3. How should the system produce goods and services?
The diagram shows the basic economic problem at the top. underneat there are three boxes that outline the fundamental questions that an economic system must answer which arise from the economic problem. 1 - For whom, 2 - what should be produced? 3 - How should it be produced?
The basic economic problem and questions an economic system must answer.