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ANSWERING THE 3 ECONOMIC QUESTIONS

ANSWERING THE 3 ECONOMIC QUESTIONS. BY: LISA ENNIS 8 TH period. TERMS TO KNOW. Economic system- the method used by a society to produce and distribute goods and services Factor payments- income people receive for supplying factors of production

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ANSWERING THE 3 ECONOMIC QUESTIONS

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  1. ANSWERING THE 3 ECONOMIC QUESTIONS BY: LISA ENNIS 8TH period

  2. TERMS TO KNOW • Economic system- the method used by a society to produce and distribute goods and services • Factor payments- income people receive for supplying factors of production • Safety net- government programs that protect people experiencing unfavorable economic conditions • Standard of living- level of economic prosperity

  3. TERMS TO KNOW • Traditional economy- economic system that relies on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it. Ex: boys take occupations of their fathers • Market economy- decisions are made by individuals and are based on exchange, or trade. Ex: free markets • Centrally planned economy- the central government makes all the decisions on the production and consumption of goods and services • Command economy- a central authority is in command of the economy; centrally planned economy • Mixed economy- market based economic system with limited government involvement

  4. The Key Economic Questions • What goods and services should be produced? • How should these goods and services be produced? • Who consumes these goods and services?

  5. What goods and services should be produced? • Each society must decide what to produce in order to satisfy needs and wants • The more you produce of some goods and services the less you can produce of other goods and services (tradeoffs and opportunity cost) • Basic needs: food, shelter, clothing; wants: luxury items; services: education, health care, defense

  6. How should these goods and services be produced? • There are countless ways to create all of the things we want and need, which all require capital, land, and labor • Ex: size and organizations of facilities, resources to use, time and effort communication

  7. Who consumes these goods and services? • Societies must decide how to distribute the available goods and services • Ex: choices in products, value or price to products, access to services

  8. Goals and values to answer questions • Economic efficiency-make the most of resources • Economic freedom- from government intervention from the production and distribution of goods and services • Economic equity- fair distribution of wealth • Economic growth and intervention- innovation leads to economic growth, and economic growth leads to a higher standard of living • Other goals- societies pursue additional goals, such as environmental protection

  9. Review! • What are the 3 economic questions? • The more you produce of some goods and services the less you can produce of other goods and services (tradeoffs and opportunity cost) is which of the 3 questions? • Give an example of each question! ____ Factor Payments ____Safety Net income people receive for supplying factors of production government programs that protect people experiencing unfavorable economic conditions

  10. Economies ReviewVideo!!  • http://www.youtube.com/watch?v=hg_4ogC_yiE&feature=related

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