1.1This essay will explain the basic economic problem and the types of economic systems used to solve it. This essay will also include an explanation of the current structure of the private and public sectors of the UK economy and the competitive environment in which organizations operate and its impact on their behaviour. Using business examples, the meaning of elasticity for business organizations will also be explained. The economic problem is a theory that only limited and insufficient resources are available to satisfy people's needs and wants. There are never enough resources to produce everything that everyone would like to produce. Many people will have to do without some of the things they need. Alternatively, they make choices that offer the lowest opportunity cost. The economic problem is that resources are scarce compared to the purposes for which they could be used. (Bized, 2012) Therefore, as a result, choices must be made about how to use resources. Another term for the economic problem is “scarcity and choice”. Money may not be a solution to the economic problem. However, to some extent it is, when used as investment capital. The basic economic problem is that resources are scarce, but on the other hand our needs are infinite. Resources are classified into four categories. These are the resources of the Earth, of Work, which includes all the human mental and physical effort that goes into production; Capital, which includes all equipment, machinery and buildings that are not used for their own sake; and finally, Enterprise, which includes the skills needed to organize other resources into some form of production. Society must consider the most obvious needs of producing or...... middle of paper....... (Answers, 2012) Companies often strive to sell/market products or services that are or appear to be inelastic compared to the question because this may mean that few customers will be lost due to the price increase. The elasticity of demand shows how many more units of a product will be sold when the price is reduced or how many fewer units will be sold when the price is increased. Companies would like to increase unit sales, but do not want to reduce prices because this could reduce profits. They then look for ways to reduce prices for those customers who will only buy at lower prices. (Answers, 2012) But they try to keep prices higher for customers who are willing to pay higher prices. For example, some price elastic goods are coffee, money, jewelry, hamburgers, lottery tickets, computers, TVs, CDs, etc. Some price inelastic goods are museum tickets, salt, gasoline, drugs, food, etc..